Factors Affecting Dividend Payment Ability to Pay Dividends Net income increases. The ability to pay dividends . More profitable investment opportunities are available. The ability to pay dividends . The firm increases its debt ratio. The ability to pay dividends . Defense Dynamics Co. is a typical company that is very concerned with meeting investors' expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Defense Dynamics Co.'s dividend policy? Despite the fact that Defense Dynamics Co.'s earnings tend to fluctuate from year to year, the company most likely pays a predictable, stable dividend each year. Defense Dynamics Co. most likely pays very large dividends in years with high earnings and small dividends in the years with low earnings.