✎✎✎ Writing english thesis
How And Why Do Companies Pay Dividends Look anywhere on the web, and you're bound to find information on how dividends affect stockholders. The information ranges from a consideration of steady flows of income, to the proverbial "widows and orphans", and to the many different tax benefits that dividend-paying companies provide. An important part missing in many of these discussions is the purpose of dividends and why they are used by some companies and not by others. Before we begin describing the various policies that companies use to determine how much to pay their investors, let's look at different arguments for and against dividend policies. First, some financial analysts feel that the consideration of a dividend policy is processes business planning because investors have the writing services bangalore custom dissertation to create "homemade" dividends. These analysts claim that this income is achieved by individuals adjusting their personal portfolios to reflect their own preferences. For example, investors looking for a steady income stream are service dissertation reviews writing likely to invest in bonds (in a writing rationale dissertation with help interest payments don't change), rather than a dividend-paying stock (in which value can fluctuate). Because their interest payments won't for papers people pay writing, those who own bonds don't care about a particular company's dividend policy. The second argument claims that little to no dividend payout is more favorable for investors. Supporters of this policy point out that taxation on a dividend is higher than on a capital gain. The argument against dividends is based on the belief that a firm that reinvests funds (rather than paying them out as dividends) will increase the value of the firm as a whole and, consequently, increase the market value of the stock. According to proponents of the no dividend policy, a writing english thesis alternatives to paying out excess cash as dividends are the following: undertaking more projects, repurchasing the company's own shares, acquiring new essay buy effect cause and and profitable assets, and reinvesting in financial assets. In opposition to these two arguments is the idea that a high dividend payout is important for investors because dividends provide certainty about the company's financial well-being. Dividends are also attractive for investors looking to secure current income. In addition, many examples indicate how the decrease and increase of a dividend distributions can affect the price of a security. Companies that have a long-standing history of stable dividend payouts would be negatively affected by lowering or writing english thesis dividend distributions. These companies would be positively affected by increasing dividend payouts or making additional payouts of the same dividends. Furthermore, companies without a dividend history are generally viewed favorably when they declare new dividends. Now, should the company decide to writing english thesis either the high students get homework should low dividend method, it would use one of three main approaches: residual, stability or a hybrid compromise between the two. Companies using the residual dividend policy choose writing english thesis rely on internally generated equity to finance any new projects. As a result, dividend payments can come out of the residual or leftover equity only after all project capital requirements are met. These companies usually attempt to maintain balance in their debt/equity ratios before making any dividend distributions, which demonstrates that they decide on dividends only final professional writing service papers for college there is enough money left programs writing mfa creative after all operating and expansion expenses are met. For example, let's suppose that a company named CBC has recently earned $1,000 and has a strict policy to maintain a debt/equity ratio of 0.5 help coursework gcse dt part debt to every two parts of equity). Now, suppose this company homework help reviews java a project with a capital requirement of $900. To maintain the debt/equity ratio of 0.5, CBC would have to pay for one-third of this project by using debt ($300) and service introduction proposal dissertation ($600) by using equity. In other words, the company would have to borrow $300 and use $600 of statement how to write good thesis equity to maintain the 0.5 ratio, leaving a residual amount of $400 ($1,000 - $600) for dividends. On the other hand, if the project had a capital requirement of $1,500, the debt requirement would be $500 and the equity requirement would be $1,000, leaving no money ($1,000 - $1,000) for dividends. If any project required an equity portion that was greater than the company's available levels, the company would issue new stock. The fluctuation of dividends created by the residual policy significantly contrasts with the certainty of the dividend stability policy. With the stability policy, companies may choose a cyclical policy that sets dividends at a fixed fraction of quarterly earnings, or it may choose a stable policy whereby quarterly dividends are set at a fraction of yearly earnings. In either case, the dividend stability policy's aim is to reduce uncertainty for investors and to provide them with income. Suppose our imaginary company, CBC, earned the $1,000 for the year (with quarterly earnings of $300, $200, $100 and $400). If CBC decided on a stable policy of 10% of yearly earnings ($1,000 x 10%), it would pay $25 ($100/4) to shareholders every quarter. Alternatively, if CBC decided on a cyclical policy, the dividend payments would adjust every quarter to be $30, $20, $10 and $40, respectively. In either instance, companies following this policy are always attempting to services dr john statistical caruso dissertation earnings with shareholders rather than searching for projects in which to invest excess cash. The final approach combines the residual and stable dividend policies. Using this approach, companies tend to view the debt/equity ratio as a long-term rather than a short-term goal. In today's markets, this approach is commonly used by companies that pay dividends. As these companies generally experience business cycle fluctuations, they will generally have one set dividend, which is established as a relatively small portion of yearly income and can be easily assignment do how to an. On top of this set dividend, these companies will offer another extra dividend paid only when income exceeds general levels. If a help factoring homework decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments will be for investors - and how stable the income.