Reynolds Paper Products Corporation follows a strict residual dividend policy.All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share?

Question

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Reynolds Paper Products Corporation follows a strict residual dividend policy, which means that the dividend paid is based on the company's residual earnings after meeting its investment needs. Therefore, an increase in the firm's net income will lead to an increase in residual earnings available for dividend payment, and subsequently, an increase in the firm's dividend per share. The other factors listed would not have as direct of an impact on the firm's dividend policy.

Reynolds Paper Products Corporation Follows a Strict Residual Dividend Policy