Which one of the following statements appears to be supported by the current dividend policies of U.S. industrial firms?
A) Companies tend to increase the dividend amount per share, even when it's unclear if the increase can be maintained.
B) Investors no longer react to changes, either up or down, in dividends.
C) Newer, high-growth firms tend to pay larger dividends than mature firms.
D) Dividends are still viewed by shareholders as a signal of a company's future outlook.
E) Managers are no longer hesitant to lower dividend payments.

Question

Quizplus · Accepted Answer

The current dividend policies of U.S. industrial firms suggest that dividends are still viewed by shareholders as a sign of a company's future outlook. This indicates that dividends are still seen as a way to communicate a company's financial health and potential growth. There is no indication that companies tend to increase the dividend amount per share even when it's unclear if the increase can be maintained or that newer, high-growth firms tend to pay larger dividends than mature firms. There is also no evidence to suggest that investors no longer react to changes in dividends or that managers are no longer hesitant to lower dividend payments.

Which One of the Following Statements Appears to Be Supported