The Economics of Dividends

To write this essay you need to refer to the articles on dividends that I have posted on the course website. These are all short articles and easily understood. You can also refer to any other relevant knowledge-article.

Your report should address the following points and anything else that you want to include- the purpose of the report is to write a comprehensive essay showing your understanding of dividends.

General Suggestions are given below but you are free to decide how you present the material and in what sequence:

First you should explain the relationship between dividends and stock prices with reference to the dividend discount model. As dividends are of two types i.e. cash dividends and stock dividends, what are the reasons for giving either type of dividends and does giving of such dividends affect the stock price? In your answer also bring in the discussion about dividend yield and dividend payout ratio. Link in your answer a discussion of profits and retained earnings with dividends. Should you shares of firms that pay dividends or should you growth stocks; are firms that pay high dividends good or those that pay low dividends – why?

Format of Report

– Title Page with project title, your id and name and course code and name

– Table of contents – which should list the sections in your report

– Main Report – start off with the section on introduction in which you tell us what this report is about and why it is important to discuss dividends then also include in it all other sections

– Conclusion – summarize main findings of your report which should be useful to an investor

– References – list the references that you used in writing your report. In to learn how to list references look at any journal article.