Southern Cities Trucking Company has the following five-year record of earnings

per share.

Year EPS

2012 $1.40

2013 $2.10

2014 $1.00

2015 $3.25

2016 $0.80

Which of the following procedures would produce higher dividends to stockholders over this

five-year period?

a. Paying out dividends at a fixed ratio of 40% of EPS

b. Paying out dividends at a fixed rate of $1 per share