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Unformatted text preview: ver, in case the latter is preferred the firm has to decide how to
payback the shareholders: As dividends or capital gains through stock repurchase.
Dividend policy in practice
Earnings can be returned to shareholders in the form of either dividends or capital gain through stock
repurchases. For each of the two redistribution channels there exists several methods:
Dividends can take the form of
- Regular cash dividend
- Special cash dividend
Stock repurchase can take the form of
- Buy shares directly in the market
- Make a tender offer to shareholders
- Buy shares using a declining price auction (i.e. Dutch auction)
- Through private negotiation with a group of shareholders 8.11.1 Dividend payments in practise The most common type of dividend is a regular cash dividend, where "regular" refers to expectation that
the dividend is paid out in regular course of business. Regular dividends are paid out on a yearly or
quarterly basis. A special dividend is a one-time payment that most likely will not be repeated in the future.
When the firm announces the dividend payment it specifies a dat...
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- Spring '12