The best way to convey to the market that a new level of cash flow is permanent is to increase (or commence) a regular cash dividend since a regular dividend comes with the expectation that it will not be reduced without unforeseen events occurring in the future

Question

Quizplus · Accepted Answer

A regular cash dividend signals stability and predictability in a company's cash flow. It communicates to the market that the company is confident in its ability to sustain its cash flow levels and return value to shareholders in the form of regular income. This can help to build investor confidence and may lead to an increase in stock price over time. Additionally, reducing or suspending a regular dividend is typically viewed as a negative signal to the market and can result in a decline in stock price. Therefore, increasing or commencing a regular cash dividend is a good way to demonstrate to the market that a new level of cash flow is expected to be permanent.

The Best Way to Convey to the Market That a New