Dividend Policy | লভ্যাংশ নীতি | Financial Management | Class 02

Dividend Policy | লভ্যাংশ নীতি | Financial Management | Class 02

Rasel Bhuiyan
Teacher | Founder & CEO BBA WORLD 365
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What Is a Dividend Policy?
A dividend policy outlines how a company will distribute its dividends to its shareholders. This policy details specifics about payouts including how often, when, and how much is distributed. There are many types of dividend police including stable, constant, and residual policies.

How a Dividend Policy Works
Some companies choose to reward their common stock shareholders by paying them a dividend. A dividend is paid on a regular basis and usually represents a portion of the profits that these companies earn. This gives shareholders a regular stream of income, which is why dividend-paying stocks are a favorite for some investors.
Having a dividend policy in place is important for dividend-paying companies. This is a structure that highlights several key points, including:
• How often dividends are paid out (monthly, quarterly, or annually)
• When they are paid
• How much to pay shareholders
These decisions are made by a company's management team. It must also decide what, if any, other factors may have to be put in place that would influence dividend payments. An additional factor to consider includes providing shareholders with the option to take their dividends in cash or allowing them to reinvest them by purchasing additional shares through a dividend reinvestment program.

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