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2.1.6 Aspect of Dividend policies
2.1.6.1. Dividend policy indicators
According to (Berk et al., 2011). there are two main indicators
to measure the general dividend policies :
I. Dividend yield
Stock price is a market measurement in calculating dividend
yield. Dividend yield is a ratio that connects dividend paid and
common stocks. It provides a component for measuring the
total returns of dividend yield by adding the existing appraisal
price. Some investors use dividend yield as a risk measurement
and benchmark for doing investment. They are striving for
investment with high return and high dividend yield.
II. Dividend Payout Ratio ( DPR )
Dividend payout ratio is a ratio between dividend and profits
for common shareholders. It is usually used as the assessment
for estimating the future dividend, whereas most analysts pr efer
to estimate the growth by retained earnings than dividends.
2.1.6.2. Alternative dividend policies
There are numerous alternative dividend policies that might be
useful for distributing dividend payment ( Weygandt, 2011) :
1. A constant dividend payout ratio
This is the guideline that
states the percentage of income
disbursed remains constant. Nevertheless, the dollar amount of
dividend impulsively fluctuates from one year to another in
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