Payout Policy

Payout policy refers to a company's strategy regarding how it distributes profits to its shareholders. This can include dividends, which are direct payments to shareholders, or share buybacks, where a company purchases its own shares to increase their value. The choice between paying dividends or reinvesting profits back into the business reflects the company's financial health, growth opportunities, and management's vision. A solid payout policy balances the desire to reward shareholders with the need to fund future growth, ultimately impacting the company’s stock price and investor satisfaction.