BMGT440ch1819-Dividends

BMGT440ch1819-Dividends - BMGT440-University of Maryland...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: BMGT440-University of Maryland Dr. E F Kiss ch18- Dividends and Dividend Policy: Why Does It Matter? Chapter 18 in 7 th & 8 th ed. Chapter 19 in 9 th ed. BMGT440-University of Maryland Dr. E F Kiss ch18- Key Concepts and Skills Understand dividend types and how they are paid Understand the issues surrounding dividend policy decisions Understand why share repurchases are an alternative to dividends Understand the difference between cash and stock dividends BMGT440-University of Maryland Dr. E F Kiss ch18- Chapter Outline 18.1 Different Types of Payouts 18.2 Standard Method of Cash Dividend Payment 18.3 The Benchmark Case: An Illustration of the Irrelevance of Dividend Policy 18.4 Repurchase of Stock: An Alternative to Cash Dividends 18.5 Personal Taxes, Issuance Costs, & Dividends 18.6 Real World Factors Favoring a High Dividend Policy & Some Favoring a Low Payout 18.7 The Clientele Effect: A Resolution of Real- World Factors? 18.8 What We Know and Do Not Know About Dividend Policy 18.9 Putting it all together 18.19 Stock Dividends and Stock Splits 18.11 Summary and Conclusions BMGT440-University of Maryland Dr. E F Kiss ch18- 18.1 Different Types of Dividends Many companies pay a regular cash dividend . Public companies often pay quarterly. Sometimes firms will throw in an extra cash dividend. The extreme case would be a liquidating dividend . Often companies will declare stock dividends . No cash leaves the firm. The firm increases the number of shares outstanding. Some companies declare a dividend in kind . Wrigleys Gum sends around a box of chewing gum. Other companies use stock buybacks . BMGT440-University of Maryland Dr. E F Kiss ch18- 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 wont be repeated Liquidating dividend some or all of the business has been sold distribution from capital Dividend usually refers to cash paid from earnings; (accounting debit retained earnings and credit dividends payable; then debit dividends payable and credit cash); if payment is made from sources other than current or accumulated retained earnings, the term distribution , rather than dividend is used. BMGT440-University of Maryland Dr. E F Kiss ch18- Dividend Payment Declaration Date Board declares the dividend and it becomes a liability of the firm Ex-dividend Date Date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend Occurs two business days before date of record (prior to June 1995 the ex-dividend date was 4 business days before date of record) If you buy stock on or after this date, you will not receive the dividend Stock price generally drops by about the amount of the...
View Full Document

Page1 / 55

BMGT440ch1819-Dividends - BMGT440-University of Maryland...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online