文档介绍：Lecture 8 Dividends and Dividend Policy
Lecture 8
Dividends and Dividend Policy
Cash Dividends
Regular cash dividend – cash payments made directly to stockholders, usually each quarter
Extra cash dividend – indication that the “extra” amount may not be repeated in the future
Special cash dividend – similar to extra dividend, but definitely won’t be repeated
Liquidating dividend – some or all of the business has been sold
Dividend Payment
Declaration Date – Board declares the dividend and it es a liability of the firm
Ex-dividend Date
Occurs two business days before date of record
If you buy stock on or after this date, you will not receive the dividend
Stock price generally drops by about the amount of the dividend
Date of Record – Holders of record are determined and they will receive the dividend payment
Date of Payment – checks are mailed
Figure 183>.2
Does Dividend Policy Matter?
Dividends matter – the value of the stock is based on the present value of expected future dividends
Dividend policy may not matter
Dividend policy is the decision to pay dividends versus retaining funds to reinvest in the firm
In theory, if the firm reinvests capital now, it will grow and can pay higher dividends in the future
Illustration of Irrelevance
Consider a firm that can either pay out dividends of $10,000 per year for each of the next two years or can pay $9000 this