Which of the following statements is correct?

One advantage of dividend reinvest plans is that they enable investors to avoid paying taxes on the dividends they receive

If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not follow the strict residual dividend policy

If a firm follows a strict residual policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firms investment opportunities improve

If congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratios

Despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier or firms to attract a clientele that prefers high dividends, such as retirees