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    Discuss Factors Influencing a Dividend Policy

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    Discuss the factors that influence a firm's dividend policy. Which factors are most important in formulating the dividend policy? Why?

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    Solution Preview

    According to Brigham and Houston (2007), optimal dividend policy must strike the particular balance between current dividends and future growth that maximizes the stock price (p. 465).

    Dividend policy
    1. Cash dividends—payments made to stockholders.
    2. Dividend policy—decisions about when and how much of earnings ...

    Solution Summary

    Dividend policy refers to the financial policies the firm considers when paying cash dividends. The Solution outlines the factors involved.