What dividend policy is probably the best from a financial standpoint, but not likely to be accepted by the market place or investors?

Question

Quizplus · Accepted Answer

The residual dividend policy is probably the best from a financial standpoint as it ensures that the company only pays out dividends after meeting all investment needs and maintaining a sufficient cash reserve. This policy aligns with the objective of maximizing shareholder wealth by allowing the company to invest in profitable projects and grow its value over time. However, this policy may not be accepted by the market or investors who prefer consistent and predictable dividend payouts, even if it means sacrificing long-term growth opportunities. Therefore, while the residual dividend policy may be the best from a financial standpoint, it may not be the most popular or accepted amongst investors.

What Dividend Policy Is Probably the Best from a Financial