Dividend and Dividend Policy

568 Words2 Pages

Dividends are commonly described as the distribution of earnings in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy therefore refers to the payout policy which a company uses in deciding the size and pattern of cash distribution to its shareholders over time. (Kapoor, 2009:5).
Mullin plc clearly used a stability strategy from 2003 to 2007 with the annual dividend rate being five shillings per share. The current economic conditions have clearly affected its ability to pay dividends to its shareholders. This is clearly as a result of the great depression .As a result; the shareholders are most likely in doubt of the company’s well being and overall financial position. Mullin plc must solve this problem using one of the strategies mentioned above.
One of the most important factors to consider when deciding Mullin’s new dividend policy is its current financial position. Apart from this, the paramount objective of wealth maximization for the shareholders should be taken into consideration. It is also important to consider that dividend r...

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