5 concepts
Accounting Considerations
Accounting for dividends depends on their payment method (cash or stock).
Investor Preferences
The significance of investors' dividend preferences is a contested topic in finance that has serious implications for dividend policy.
Stock Dividends vs. Cash Dividends
Investors' preference for stock or cash depends on their inclinations toward factors such as liquidity, tax situation, and flexibility.
Signaling
Dividend decisions are frequently seen by investors as revealing information about a firm's prospects; therefore firms are cautious with these decisions.
Impact of Dividend Policy on Clientele
Change in a firm's dividend policy may cause loss of old clientele and gain of new clientele, based on their different dividend preferences.