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Contents 1 Introduction to Dividends 2 1.1 What is Dividend 2 1.2 Different Forms of Dividends 2 2 The Importance of Dividend Decision 3 3 What Factors Determine Dividend Policy? 3 3.1 Key Factors for Making Dividend decision 3 3.1.1 Clientele Aspect 3 3.1.2 Firm Aspect 5 3.2 How Dividend Decision be Determined in Real World 6 3.2.1 High Payout of Dividend 6 3.2.2 Moderate Payout of Dividend 8 3.2.3 Low Payout of Dividend 10 4 Conclusion 11 5 Reference and Bibliography 13 1 Introduction to Dividends 1.1 What is Dividend The term dividend usually refers to cash distributions of earning to shareholders, more specifically, to those shareholders who are registered on a particular record date. However, in practice, 'any direct payment by the corporation to the shareholders may be considered part of dividend policy' (Ross, S. A., Westerfield, R. W. and Jaffe, J. 1996: 482). 1.2 Different Forms of Dividends Dividends come in many forms. But the most common type of dividend payment is in the form of cash dividend. Cash dividend can be classed in two categories: regular cash dividend and extra cash dividend. Share repurchase is considered an alternative to cash dividend. Firms...

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