There are many reasons as to why companies should pay or not to pay dividends. For example, the dividend payout is important for investors because i) dividends provide certainty about the company’s financial well-being, ii) dividends are attractive for investors looking to securecurrent income, and iii) dividends help maintain market price of the share. Companies that have a long-standing history of stable dividend payouts would be negatively affected by lowering or omitting dividend distributions. These companies would be positively affected by increasingdividend payouts or making additional payouts of the same dividends. Furthermore, companies without a dividend history are generally viewed favorably when they declare new dividends.
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