The dividend policy that states smoothing of the dividend stream in order to minimise the effect of company reversals is called the

Question

Quizplus · Accepted Answer

The stable dividend policy aims to smooth out the dividend stream and reduce the impact of any fluctuations in the company's earnings or financial situation. This policy is often preferred by investors who prioritize consistent and predictable payouts, rather than the amount of the dividend. Options A and D relate to different dividend policies. The clientele effect policy refers to the idea that companies tend to attract specific types of investors based on their payout practices, while the residual payout policy involves allocating earnings to dividend payments only after all other investment opportunities have been addressed.

The Dividend Policy That States Smoothing of the Dividend Stream