Dividend Policy - Essay Example

Comments (0) Cite this document
Summary
 This study "Dividend Policy" emphasizes the critical analysis of dividend decision of Tesco Plc. outlining its policy for the last 5 years. It also demonstrates the effect of dividend payment on the wealth maximization of the shareholders…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96% of users find it useful
Dividend Policy
Read TextPreview

Extract of sample "Dividend Policy"

Download file to see previous pages Various analysts have examined that the dividend policy could highly affect shareholders’ wealth (Gul et al., 2012). The ability of a firm to distribute cash and increase the wealth of shareholders depends on the earnings capability of the firm and its capacity to raise fund from the external sources (Brealey, 2012). There are two ways of raising funds which are debt and equity (Kelly, 2012). Debts are the instrument where the holder gets a fixed payment along with interest (Denis and McKeon, 2012). On the other hand, the equity holders are the owner of the company to the extent of their holding (Hillier et al., 2011). However, as per the Modigiliani and Miller (M&M) model, the dividend policy of an organization has negligible or no effect on the shareholder’s wealth because the firm value is independent of its dividend policy. Moreover, in the accounting process, the dividend paid or received is calculated in cash flow which is very important for calculating the enterprise value through discounted cash flow method (Brooks and Mukherjee, 2013).
Policy Structure of Tesco Plc
Tesco Plc is one of the largest retailers globally. It is a British multinational, founded in 1919 and is headquartered in England. The payment of dividend has been consistent for 5 years. Nevertheless, in recent days, the wealth of shareholders has been weak as the profit generation of Tesco has been low, but it recovered in 2013-14 as the dividend paid is £1,193m in comparison to £1,186m in 2012-13. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Dividend Policy Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Dividend Policy Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/finance-accounting/1702062-dividend-policy
(Dividend Policy Essay Example | Topics and Well Written Essays - 1250 Words)
Dividend Policy Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/1702062-dividend-policy.
“Dividend Policy Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/finance-accounting/1702062-dividend-policy.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Dividend Policy

Stevenson's Young Man with the creme tarts

2 Pages(500 words)Essay

DIVIDEND POLICY

...? DIVIDEND POLICY Dividend is the payments that are given to the shareholders from the profits or reserves of a company. In the case of Associated British food company plc, the shareholders have experienced increasing dividends in the last four years. The management increased both the interim and final dividend throughout the four-year period. In 2007 the company paid an interim dividend of 6.5p which increased to 6.75p in 2008, 6.9p in 2009,7.6p in 2010 and finally 7.9p in 2011. For the case of the final dividend, the amount paid in 2008 was 13.5p, which was increased to 14.1p, 16.2p, 16.85p in 2009,200 and 2011...
3 Pages(750 words)Essay

Marks & Spencers Dividend Policy

...ways a firm pay out cash to its shareholders such as dividend payout, stock repurchase and new stock dividends as practiced by Marks & Spencer. The first step toward understanding dividend policy is to recognize that the phrase means different things to different people. A firm's decisions about dividends are often mixed up with other financing and investment decisions. Some firms pay low dividends because management is optimistic about the firm's future and wishes to retain earnings for expansion. In this case the dividend is a by-product of the firm's capital budgeting decision. Another firm might finance capital...
12 Pages(3000 words)Essay

Dividend Policy and Share Price

...Dividend Policy: Dividend Policy Can Affect Listed Companys Share Price. There are different types of investment options available to every investoracross the globe but the sole aim of every investment is common- To generate maximum possible return with limited employed capital. When share holders invest their money in the stock of a company, it becomes the responsibility of the management to provide them maximum returns on their investment. With the help of the capital accrued from various shareholders, the company subsequently enters into a predefined business, and tries to generate maximum possible profit. The excess liquidity obtained from the profits thus earned,...
6 Pages(1500 words)Essay

Dividend Policy

...Companies frequently re-examine their actions regarding the dividends to be paid to stockholders. Dividends are retained earnings paid to stockholders. Decisions regarding dividends are guided by the firm’s dividend policy. Dividend policy is influenced by the investment opportunities available to the firm. Stockholders have certain requirements that need to be taken into consideration in determining dividend policy or formulation of an appropriate dividend structure. Arriva is the one of the biggest names in the transport service business in the European market. Arriva’s...
3 Pages(750 words)Essay

Gun Laws

5 Pages(1250 words)Research Paper

Dividend Policy

...Dividend Policy This February Apple has doled out this quarter’s dividends. However, Greenlight Capital, one of its shareholders, slapped the companywith a lawsuit, demanding a modification of such policy. This was the subject of the news article written by Brett Molina for USA Today. The news reported Apple’s response on the lawsuit, which was filed earlier. In the interest of clarity, the news included contents of the lawsuit – particularly, why it was lodged and what it was asking – and how Apple addressed the issue. Greenlight Capital’s position according to the report is that there should be higher dividends considering the amount of money available...
2 Pages(500 words)Essay

Doea a dividend policy matter

...Does a dividend policy matter? Contents Does a dividend policy matter Contents 2 Introduction 3 Analysis 3 Bird in the Hand Argument 5 Tax Advantage Argument 5 Hypothesis of Dividend Irrelevance 6 Clientele Effects of Dividends Hypothesis 7 Conclusion 8 References 10 Introduction There are two consensuses with regard to dividend policy such as academic consensus and the other is the consensus of practitioners. Dividends don’t play an important role according to the academic consensus. This consensus tells that it is not expected of the market to pay premium prices for firms that have adopted dividend policies that can be considered as generous. It considers the process of paying dividend by firms as something which is irrelevant... . It is...
8 Pages(2000 words)Essay

Cultural analysis of Inda

3 Pages(750 words)Research Paper

CASE STUDY

5 Pages(1250 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Dividend Policy for FREE!

Contact Us