Define a.) Stable dividend policy b.) No immediate dividend policy c.) Regular and extra dividend policy d.) Regular stock dividend policy

Define a.) Stable dividend policy b.) No immediate dividend policy c.) Regular and extra dividend policy d.) Regular stock dividend policy e.) Irregular dividend policy

a.) Stable dividend policy

This is also called Regular policy in this company pays dividend at fixed rate, and maintains it for long time even the profit fluctuates. It pays minimum amount of dividend every year regularly. A firm paying this can satisfy the shareholders and can enhance the credit in market. In this the dividend must be stable and also helps in raising long term finance.

b.) No immediate dividend policy

Company pays no dividend in the beginning when it starts as it might be requiring credit for growth and expansion. This happens in the case of outside funds are costlier and the market is also very difficult to handle. This kind of policy can be used in short term period only and not good for long term.

c.) Regular and extra dividend policy

In this Pay out ratio is used which a firm pays continuously. But when sometimes the earnings exceed the normal level, management pays extra dividend in addition to the regular dividend. It doesn’t mean that the company is earning extra profit that it is paying extra dividend.

d.) Regular stock dividend policy

In this a particular firm pays dividend in the form of shares not in the form of cash continuously for some years. Stock dividends are used as bonus shares and when company is short of cash or a crunch then this policy is used. It is not used for long time because number of shares will go on increasing, which would result in fall in earnings per share.

e.) Irregular dividend policy

In this firm doesn’t pay the fix dividend regularly and it changes from year to year according to changes in earnings level. This is followed by the company which have unstable earning.