Topic 12- Dividend Policy Flashcards
a dividend is a
distribution of firms retained earnings to shareholders
a dividend is in proportion to
the % of a firm’s shares that they own
3 timings for div payments in NZ
annual, semi-annual, quarterly
dividend payments are viewed by managers as
a tool for signaling prospects for sustainable earnings growth
when do div payments usually occur?
when the firm is unable to intelligently reinvest all or part of the earnings
what does it mean if divs vary in price?
not usually the case
increase is good shows earnings more
decrease is bad shows that the firm cannot pay you
3 types of dividends
regular
special
repurchase
regular dividends
regular occurring divs of corporate earnings of firm to shareholders
special dividends
one-off distributions if exceptional profits
repurchase (buyback)
popular alternative to divs
when a company buys some of your stokc from you
dividend imputation is the double
taxation of dividends
dividend imputation allows tax paid by the firm to be
passed onto shareholders as tax credits
the tax credits from dividend imputation
can be offset against shareholders personal tax due
interim div payments
on-going
final div payments
when firm shuts down
