On the contrary if the company invested with the

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On the contrary, if the company invested with the dividends and the expected return is lower than the cost of capital, this will damage the shareholder interest. Shareholder would have better use of the dividend after distribution 3. What do you understand by the term ‘shareholder clientele’? A group of shareholders with a preference regarding how much a company will pay out in dividends, often for tax reasons. Dividend clientele usually make decision regarding distribution based on which is most advantages to them. Clientele groups are often dictated by age as well as income level. Older or retired investors tend to prefer higher dividend income than younger shareholders, who prefer that the company use free cash flows to fund growth rather than to distribute as dividends future capital gain. Ultimately, dividend clienteles tend to be growth-versus- income parties. The effects of dividend clientele on a company’s stock price are somewhat controversial 4. What categories of shareholders are likely to prefer nearer-in-time dividends?
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  • Fall '14
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