As an investor, would you rather invest in a firm that has a policy of maintaining (1) a constant payout ratio, (2) a stable, predictable dividend per share with a target dividend growth rate, or (3) a constant regular quarterly dividend plus a year end extra payment when earnings are sufficiently ...

In our opinion investors who intend to invest in companies that maintain a relatively high payout pr ...

As an investor, would you rather invest in a firm that has a policy of maintaining (1)

Question:

As an investor, would you rather invest in a firm that has a policy of maintaining (1) a constant payout ratio, (2) a stable, predictable per share with a target growth rate, or (3) a constant regular quarterly plus a year-end extra payment when earnings are sufficiently high or corporate investment needs sufficiently low? Explain your answer, stating how these policies would affect your required rate of return, rs. Also, discuss how your answer might change if you were a student, a 50-year-old professional with peak earnings, or a retiree.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...