- This topic has 7 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
How do we understand if the investments the company is making is linked to the dividend policy of the company?
Future dividend growth will need profit growth, and to achieve long-term profit growth needs additional investment.
So in the q if they give figures for earnings, dividends and investments, if ividends are decreasing and investments are increasing we will say that the dividend policy is consistent with the investment policy?
No – it would not be consistent.
If investments are increasing you would expect the dividends to be growing, as per Gordons growth approximation.
sir in chithurst co question sep/dec 2016 for iping how do we understand it was following a residual dividend policy
It is because the dividend paid is the profit less the new investment expenditure (not precisely but near enough). They are simply investing what they can and letting the shareholders have whatever remains.
- The topic ‘dividends’ is closed to new replies.