Dividend policy refers to the policy chalked out by companies regarding the amount it would pay to their shareholders as dividend. With profit making comes the question of utilizing the profit gainfully. The companies have two options with them: They can retain these profits within the company. They can pay these profits in the form of dividends to their shareholders The dividend policy to be
. adopted by the company is based on these two options. Once this is sorted out, a permanent dividend policy can be put into place. These policies shape the attitude of the investors and the financial market in general towards the concerned company. The policies are decided according to the current and future financial positions of the company. The preference and orientation of the investors are also taken into account. If you would like more information please visit http://www.studyfinance.com/lessons/dividends/
