Types of Dividend Policies

Types of Dividend Policies

There are basically three types of dividend policies or approaches

1. Stable Dividend Policy
2. Constant Payout Ratio Policy
3. Residual Dividend Policy

1.Stable Dividend Policy 

:- Under this policy the share holder are paid dividend at a fixed rate. This approach is very common in use because it regulate the share price effectively and prohibit any share fluctuation in share prices.

2.Constant Payout Ratio Policy 

 Under this policy a particular portion of profit is paid out as dividend. This policy is profit oriented and dividend of each period will be changed . Under this policy price of share are subject to fluctuate at market news about the profitability.

3.Residual Dividend Policy 

 Under this policy after the funding requirement of the organization , all surplus funds are distributed among share holder in the form of dividend.