What type of dividend policy should be followed by a company having growth opportunities?
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A company's dividend policy dictates the amount of dividends paid out by the company to its shareholders and the frequency with which the dividends are paid out. ... They can either retain the profits in the company (retained earnings on the balance sheet. These statements are key to both financial modeling and accounting.
As a result, a company that pays out a dividend attracts investors and creates demand for their stock. Dividends are also attractive for investors looking to generate income. However, a decrease or increase in dividend distributions can affect the price of a security.
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