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Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend
Finance & Accounting
Pages 6 (1506 words)
Name: Professor: Course Code: Date of Submission: Introduction: Mullin plc is a company that has not paid dividends to its shareholders for the last five years, that is between the periods of 2008 to 2012. However, for the periods of 2003-2007, the company paid some constant dividends which stood at a rate of 5% per each share an individual had with the company.
Dividend policy mainly concerns itself with the payment of cash dividends, at the present time, or in a near future (Barnett, 2012). It is important to denote that there are other types of dividends, such as stock dividends, and stock repurchases dividends. Stock dividends involves issuing out dividends in the form of the company’s stock, while stock repurchases dividend involves the buying of the company’s shares from willing investors by the company. This paper mainly concerns itself with cash dividend. The cash dividend policy refers to the actual amount of money that a company pays to investors. According to this policy, a company is supposed to state how much money it pays as dividends to investors, and the frequency of paying this amount of money (Garcia and Moore, 2012). The decision to pay a certain amount of dividends, and the frequency in which to pay this amount of dividends is based on the profitability of the company, and the excess cash it accumulates at the end of each trading period. When there is a surplus in cash, the company can either decide to pay dividends, or it can decide to expand its operations. Developing a dividend policy is a very challenging initiative for the directors of a company. ...
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