What is a Dividend Policy?

Perhaps for those who engaged in the business world much less an investor would have to know what's on dividend policy.

Dividend policy is a policy to determine how much profit should paid (dividend) to shareholders and how much should be reinvested in the company (retained earnings).

Devidend Payout Ratio (DPR) is divided by the annual cash dividend per share (EPS). This ratio shows the percentage of companies that paid to the holders of common shares of the company in the form of cash dividends. If the company's earnings currently detained in large numbers, means profits as a dividend to be paid less.

Dividend income for shareholders are paid each end of the period in accordance with the percentage.

Thus, dividend policy is an integral part of corporate spending decisions.

Various Kinds Dividend Policy:

1. Dividend policy is flexible, is the magnitude of each year that are tailored to the financial position and financial policies of the companies concerned are a stable dividend policy, dividend per share is the amount paid every year fixed for a certain period even if income per share per year fluctuates.
2. Dividend Policy with the establishment of a minimum dividend amount plus a certain extra amount. Is a policy that determines the amount of rupiah per share dividend at least annually if better corporate profits will pay extra dividends
3. Dividend Policy with the establishment of a constant dividend payout ratio, the dividend policy that gives the amount of which follow the profits earned by the company.

Factors influencing dividend policy:

As for some of the factors that actually happened & should be analyzed in relation to dividend policy

• Needs Fund Company, is a factor that must be considered in determining the dividend policy will be taken, namely the expected corporate cash flow, future capital expenditures are expected to come, additional needs of receivables and inventories.
• Liquidity. Liquidity is very large companies influence on  corporate investment and policy needs for the company dana.deviden a cash outflow, the greater the company's cash position and liquidity.
• Needs Debt Repayment. If companies take debt to finance expansion or to replace other types of financing, the company faced two choices, namely to finance debt at maturity or replaced with other types of securities.
• Assets Expansion level, is the faster a company grows, the greater its need to finance the expansion of its assets.
• Earnings stability, which is a company that has a stable income can often estimate how much income in the future, in this case the company tends to pay the "dividend payout ratio", from the company that its earnings fluctuate, lower dividends will be easier to paid if earnings decline in the future.