Chapter 18 Dividends and Dividend Policy 0
0 Chapter 18 Dividends and Dividend Policy
Chapter Outline Cash Dividends and Dividend Payment Does Dividend Policy Matter? Establishing a Dividend Policy Stock Repurchase:An Alternative to Cash Dividends Stock Dividends and Stock Splits
1 Chapter Outline n Cash Dividends and Dividend Payment n Does Dividend Policy Matter? n Establishing a Dividend Policy n Stock Repurchase: An Alternative to Cash Dividends n Stock Dividends and Stock Splits
Key Concepts and Skills Understand dividend types and how they are paid Understand the issues surrounding dividend policy decisions Understand the difference between cash and stock dividends Understand why share repurchases are an alternative to dividends 2
2 Key Concepts and Skills n Understand dividend types and how they are paid n Understand the issues surrounding dividend policy decisions n Understand the difference between cash and stock dividends n Understand why share repurchases are an alternative to dividends
Cash Dividends Regular cash dividend-cash payments made directly to stockholders,usually each quarter Extra cash dividend -indication that the "extra" amount may not be repeated in the future Special cash dividend -similar to extra dividend,but definitely won't be repeated Liquidating dividend-some or all of the business has been sold
3 Cash Dividends n Regular cash dividend – cash payments made directly to stockholders, usually each quarter n Extra cash dividend – indication that the “extra” amount may not be repeated in the future n Special cash dividend – similar to extra dividend, but definitely won’t be repeated n Liquidating dividend – some or all of the business has been sold
Dividend Payment Declaration Date-Board declares the dividend and it becomes a liability of the firm Ex-dividend Date Occurs two business days before date of record If you buy stock on or after this date,you will not receive the upcoming dividend Stock price generally drops by approximately the amount of the dividend Date of Record -Holders of record are determined,and they will receive the dividend payment Date of Payment-checks are mailed
4 Dividend Payment n Declaration Date – Board declares the dividend and it becomes a liability of the firm n Ex-dividend Date q Occurs two business days before date of record q If you buy stock on or after this date, you will not receive the upcoming dividend q Stock price generally drops by approximately the amount of the dividend n Date of Record – Holders of record are determined, and they will receive the dividend payment n Date of Payment – checks are mailed