The Dividend Principle of corporate finance states that:

1 If there are not enough investments that earn the hurdle rate, return the cash to the shareholders2 Dividends payments should be made at the highest possible rate without jeopardising the growth of the company3 Reinvesting retained earnings should be prioritised if it grows the market share of the company4 The dividend if the dividends yield is lower than the yiled on government bonds, value is maximised for share holders if shareholders choose a dividend reinvestment option