Which of the following policies would appeal to an investor using dividends to increase her retirement income?
A)Maintaining smoothly increasing dividends from year to year
B)A residual dividend policy
C)Maintaining a constant dividend payout ratio
D)A share repurchase plan

Question

Quizplus · Accepted Answer

Maintaining smoothly increasing dividends from year to year would appeal to an investor using dividends to increase her retirement income because it provides a predictability of income that can be relied upon each year. This policy would ensure that the dividend payments increase with inflation and provide a steady stream of income throughout retirement. The other options (B, C, and D) do not provide the same level of predictability and stability in dividend payments.

Which of the Following Policies Would Appeal to an Investor