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7. Factors that influence dividend policy external factors when they create and implement their distribution policy. Consider the following condition: Restrictions in debt contracts that state the maximum amount of dividends that can be paid in any year factors are held constant. Legal restrictions Option contract Bond indentures Along with several constraints, several internal factors within a company and external macroeconomic factors affect a firm's dividend policy. In the table, identify which factors, in general, tend to favour high or low payout ratios. Having the ability to accelerate or delay projects makes it for a firm to adhere to a stable dividend policy. A firm that can adjust its debt ratio without raising its weighted average cost of capital (WACC) sharply is likely to have a stable dividend policy