Dividend Policy CF

Dividend policy:
Dividend policy is the policy a company uses to structure its dividend payout to shareholders.
Some researchers suggest that dividend policy may be irrelevant, in theory, because
investors can sell a portion of their shares or portfolio if they need funds. This is the "dividend
irrelevance theory," and it infers that dividend payouts have minimal impact on stock price.
Dividend policy
Stable Constant Residual

dividend policy dividend policy dividend policy
Stable dividend policy:

Stable dividend policy is the easiest and most commonly used. The goal of the policy is steady
and predictable dividend payouts each year, which is what most investors seek. Whether
earnings are up or down, investors receive a dividend. The goal is to align the dividend policy
with the long-term growth of the company rather than with quarterly earnings volatility. This
approach gives the shareholder more certainty concerning the amount and timing of the
dividend.
Constant dividend policy:

The primary drawback of the stable dividend policy is that investors may not see a dividend
increase in boom years. Under the constant dividend policy, a company pays a percentage of its
earnings as dividends every year. In this way, investors experience the full volatility of company
earnings. If earnings are up, investors get a larger dividend; if earnings are down, investors may
not receive a dividend. The primary drawback to the method is the volatility of earnings and
dividends. It is difficult to plan financially when dividend income is highly volatile
Residual dividend policy:
Residual dividend policy is also highly volatile, but some investors see it as the only acceptable
dividend policy. With a residual dividend policy, the company pays out what dividends
remain after the company has paid for capital expenditures and working capital. This approach
is volatile, but it makes the most sense in terms of business operations. Investors do not want
to invest in a company that justifies its increased debt with the need to pay dividends.
Dividend distribution policy of Mahindra&Mahindra:

The Dividend Distribution Policy (“the policy”) establishes the principles to ascertain
amounts that can be distributed to equity shareholders as dividend by the Company as
well as enable the Company strike balance between pay-out and retained earnings, in
order to address future needs of the Company. The policy shall come into force for
accounting periods beginning from 1stapril, 2016.Dividend would continue to declared
on per share basis on the Ordinary Equity Shares of the Company having face value
Rs.5 each. The Company currently has no other class of shares. Therefore, dividend
declared will be distributed among all shareholders, based on their shareholding on the
record date. Dividends will generally be recommended by the Board once a year, after
the announcement of the full year results and before the Annual General Meeting
(AGM) of the shareholders, as may be permitted by the Companies Act. The Board may
also declare interim dividends as may be permitted by the Companies Act.
The Company has had a consistent dividend policy that balances the objective of
appropriately rewarding shareholders through dividends and to support the future
growth. As in the past, subject to the provisions of the applicable law, the Company’s
dividend payout will be determined based on available financial resources, investment
requirements and taking into account optimal shareholder return. Within these
parameters, the Company would endeavor to maintain a total dividend pay-out ratio in
the range of 20% to 35%ofthe annual standalone Profits after Tax (PAT) of the
Company.
Apart from the above, the Board also considers past dividend history and sense of
shareholders’ expectations while determining the rate of dividend. The Board may
additionally recommend special dividend in special circumstances. The Board may
consider not declaring dividend or may recommend a lower payout for a given financial
year, after analyzing the prospective opportunities and threats or in the event of
challenging circumstances such as regulatory and financial environment. In such event,
the Board will provide rationale in the Annual Report.

Dividend Policy CF

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Dividend Policy CF

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Dividend policy:

Stable Constant Residual

Stable dividend policy:

Constant dividend policy:

Dividend distribution policy of Mahindra&Mahindra:

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