Which of the following statements is correct about dividend policies? According to the current tax code, dividend payments are taxed at a lower rate than long-term capital gains on stock. Dividend reinvestment plans (DRIPs) allow shareholders to avoid paying taxes on the dividends that they choose to reinvest. Residual dividend policy enables a company to follow a stable dividend policy. The clientele effect suggests that companies should follow a stable dividend policy. Modigliani and Miller argue that investors prefer dividends to capital gains because dividends are more certain than capital gains.