1. Which of the following statements concerning dividend policy is true?

1. Dividend increase announcements are usually perceived as negative signals because they indicate a lack of good investment opportunities.
2. Although the residual policy is typically not used to set dividends on an annual basis, it is often used to set a firms long-run dividend policy.
3. A constant payout ratio policy enables stockholders to accurately predict future dividends.
4. Since there is no evidence that one investor clientele is better than another, firms can change dividend policies frequently with no adverse impact on stock prices
5. A low regular plus extra policy is ideally suited for firms with stable earnings streams.