StudentShare solutions
Triangle menu
  • Home
  • Subjects
  • Finance & Accounting
  • Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend

Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend - Essay Example

Not dowloaded yet

Extract of sample
Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend

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. This is because investors of the company have differing views on the current cash dividends, and also on the future expectations of the capital gain (Ross and Westerfield, 2013). Another confusion that emerges in developing a dividend policy is the effect of the policy on the share prices of the company. It is important to denote that a favorable dividend policy will always lead to an increase in the share prices of a company. On the other hand, a dividend policy that is not favorable will on most occasion lead to the reduction of the share prices of the business entity. This is an aspect that managers of a business organization will always thrive to avoid. This paper identifies, and analyzes the various dividend policies that Mullin plc has, and their advantages or disadvantages. It examines if the policy under consideration will be beneficial to the company. This paper identifies four different types of dividend policies, namely (Shukla, 2012); i. Stable dividend policy ii. Irregular dividend policy iii. No immediate policy on dividend. iv. Regular dividend policy This paper has a conclusion, which provides a clear recommendation on the appropriate policy that the company should enact, and the justifications on why that policy is the best. Regular Dividend Policy: Regular dividend policy involves a situation where investors of a company are able to receive dividends at their usual rates, and on a constant period of time. The main investors in a company that provides such kind of a dividend are usually retired individuals, or weaker members of the society. This includes people with low wages or no income sources at all. The company can maintain this type of a dividend policy only if its revenue from its business operation is stable and regular. This type of dividend policy manages to create a sense of confidence amongst the shareholders of a company (Stout, 2012). This is because they are guaranteed of a certain percentage of dividends at the end of the business financial years. It is also a sign that the operations of the business organization are stable and thus the company is making profits. This policy also ...Show more

Summary

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…
Author : browndomenica
Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Fictitious company, Mullin plc., is examining their dividend policy. For the past five years (2008-2012) it has paid no dividend"
with a personal 20% discount.
Grab the best paper

Related Essays

DIVIDEND POLICY
DIVIDEND POLICY Name Professor’s name Course Date Dividend is the payments that are given to the shareholders from the profits or reserves of a company. In the case of Associated British food company plc, the shareholders have experienced increasing dividends in the last four years.
3 pages (750 words) Essay
Company Law - Capital Dividend
It is worth mentioning in this regard that directors are deemed to be responsible for the transparency and efficiency of all activities that are performed by the company. Hence, directors are liable to perform their duties and exercise their powers for the best interest of company.
10 pages (2500 words) Essay
Dividend Policy Essay
Basic facilities like water, electricity, food and shelter should be sufficient. Real estates prices will increase when the land is in the center of the city, or in industrial areas, or in residential areas. Infrastructure of the city or town plays an important role because those are the basic amenities that an investor would look into, before buying the land.
6 pages (1500 words) Essay
Marks & Spencers Dividend Policy
The existing shareholders of the company received a mixture of new ordinary shares and redeemable "B" shares. Marks & Spencer also reduced its share capital by 17:21 - or 17 new ordinary shares for every 21 old ordinary shares. The "B" shares, on the other hand, are redeemable for cash plus interest in the future.
12 pages (3000 words) Essay
Dividend Policy Master Essay
The dividend policy of the firm is determined by the fact that the manager's depression to influence the capital structure of the firm by leveraging would allow him to independently act by increasing debt thus reducing equity. Therefore the basis of the dividend policy itself is determined by the manager's ability to manipulate the capital structure of the firm.
9 pages (2250 words) Essay
Dividend Policy and Share Price

The author states that providing dividends to the share holders in the form of cash is dragging out the money available in the firm and therefore the market capitalization of the firm should reduce by the same amount as the total dividends given, because the market capitalization is directly related to the share price.

6 pages (1500 words) Essay
Dividend Policy
Stockholders have certain requirements that need to be taken into consideration in determining dividend policy or formulation of an appropriate dividend structure. Arriva is the one of the biggest names in the transport service business in the
3 pages (750 words) Essay
Dividend Policy
In the interest of clarity, the news included contents of the lawsuit – particularly, why it was lodged and what it was asking – and how Apple addressed the issue. Greenlight Capital’s position
2 pages (500 words) Essay
Critically analyse from the appropriate theoretical perspective the dividend policy announcements for the last 10 years of the one of the following companies. The companies from which you can choose are: Barclays Plc. (BARC.L) BP Plc. (BP.L) SAB Mille
It’s made of the same things as the cost of capital when discounting. According to Maximizing shareholder wealth means maximizing the flow of dividends to shareholders through time. The governing
9 pages (2250 words) Essay
Dividend Policy
Dividend is the amount that a company pays annually or semi-annually to the shareholders out of its profit (Michaely and Roberts, 2012). However, there are certain guidelines which decide the payment of the earning to the shareholders, these set of guidelines is known as dividend policy.
10 pages (1250 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation