A company is instituting a dividend payout policy. The year-end 2020 balance sheet of company ABC listed common stock and other paid-in capital at $1,100,000 and retained earnings at $3,400,000. The next year retained earnings were listed at $3,700,000. The firm's net income in 2021 was $900,000. What would you suggest they should consider as they develop a policy? What assumptions and considerations did you make and why?

A company is instituting a dividend payout policy. The year-end 2020 balance sheet of company ABC listed common stock and other paid-in capital at $1,100,000 and retained earnings at $3,400,000. The next year retained earnings were listed at $3,700,000. The firm's net income in 2021 was $900,000. What would you suggest they should consider as they develop a policy? What assumptions and considerations did you make and why