Dividend Policy

Dividend policy refers to the strategy a company uses to decide how much money to return to its shareholders as dividends versus how much to reinvest in the business. Companies can pay dividends regularly or choose to retain earnings for growth. A good dividend policy balances providing immediate returns to investors while ensuring sufficient funds are available for future investments. Factors influencing this policy include profit levels, cash flow, market conditions, and the company’s long-term goals. Investors often prefer stable or increasing dividends, as they can signal company health and strength.