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In general, firms dividend practices fit into the categories listed in the following table (constant payout ratio, low-regular-dividend-plus-extras, residual dividend policy, and stable, predictable dividend

In general, firms dividend practices fit into the categories listed in the following table (constant payout ratio, low-regular-dividend-plus-extras, residual dividend policy, and stable, predictable dividend policies). Identify the category that each practice corresponds to in the table.

Practice

Constant Payout Ratio

Low-Regular-Dividend- Plus-Extras

Residual dividend

Stable, Predictable Dividend

Globo-Chem Co. uses a policy that allows it to pay a small, consistent dividend in years when earnings are low or large capital investments are required. In some years, the firm pays an extra dividend when excess funds are available.

St. Mildreds Brewing Co.s dividends represent the portion of earnings left after it has made all profitable investments.

Spentworth Industries Inc.s annual dividends increase by the same amount, or percentage, every year.

Omni Consumer Products Co. has received a lot of negative feedback from its investors because it uses a dividend policy that pays a set percentage of its net income even though the company's earnings fluctuate dramatically. The investors feel that this dividend policy creates too much uncertainty about the expected dividend each year.

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