Dividend policy

 6. What do you mean by dividend policy?

A dividend policy is a company's plan for dividing its net profit. The company must choose how much profit to pay out to shareholders as cash (dividends) and how much to keep (retained earnings) to grow the business. [1, 2, 3, 4]

The main types of dividend policies include:

• Stable Dividend Policy: The company pays a steady, predictable dividend every year, even if profits go up or down. This gives investors a reliable income.
• Constant Payout Policy: The company pays a set percentage of its earnings every year. If profits are high, the dividend is high. If profits drop, the dividend drops.
• Residual Dividend Policy: The company pays out whatever cash is "left over" after it pays for daily operations and new business projects.
• No Dividend Policy: The company keeps all of its profits to fund fast growth or expansion. [1, 6]

[1] https://www.investopedia.com/terms/d/dividendpolicy.asp

[2] https://annejac.ac.in/wp-content/uploads/2019/12/b.sumathi.pdf

[3] https://www.stashfin.com/blogs/what-is-dividend-policy-and-what-factors-affect-it

[4] https://www.ascotinternational.net/blog/dividend-policy/

[5] https://www.truedata.in/blog/dividend-policy-what-are-the-different-types-of-dividends

[6] https://www.angelone.in/knowledge-center/share-market/what-is-dividend-policy