LMT is a company that has been listed on the London Stock Exchange since 2004.

Institutional investors own approximately 45 per cent of the ordinary shares of the company. The recent financial performance of the company is shown below. Using the information provided, comment on the dividend policy of LMT and critically discuss whether this dividend policy is likely to be acceptable to its institutional investors.

Transcribed Image Text:

Year 2009 2008 2007 2006 2005 2004 Turnover ( million) 3.3 3.1 2.7 2.6 2.5 2.0 Earnings per share (pence) 34.2 33.0 29.2 28.6 27.6 25.4 Dividend per share (pence) 11.4 11.1 9.9 9.6 9.2 8.5 Annual inflation (%) 3.1 3.4 3.1 2.4 3.4 2.5