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Dividend policy is a type of strategy followed by publicly-traded companies in order to plan out the outflow of [url=http://www.giuseppezanottipaschere.com]giuseppe zanotti sneakers[/url] dividends to shareholders. This policy comprises of the [url=http://www.tagverts.com/barbour.php]barbour deutschland[/url] deportment on whether a company would payout profits as dividends or just retain them as retained earnings. If the firm decides to issue dividends to shareholders, the dividend policy which it is following will delineate whether or not the dividends payout will be continuous or if the issue of dividends is infrequent and on time to time basis.
The payout of dividends is dependable on the company's earnings for a relevant period, its standing and performance in the near future. Companies which are in stages of growth or in initial stages normally have a sparing dividend policy because they reinvest or plow back much of their earnings into the company to experience growth and development (Financial Dictionary 2011). Established companies such as blue chips, Unilever and Wal-Mart being some of them, are inclined to relatively liberal dividend payout policies and grant dividends regularly on quarterly or half-yearly basis.
For instance, Unilever (bearing a symbol of UL and listed on NYSE) pays a regular dividend every quarter; the most recent payout has been an amount of [url=http://www.gotprintsigns.com/abercrombiepascher/‎]abercrombie soldes[/url] US$ 0.307 on November 8, 2011. Similarly, Wal-Mart paid a quarterly dividend of US$ 0.365 recently on December 07, 2011; a payment every quarter is being followed by the company.
Dividends payment do assure shareholder satisfaction but some research, particularly Modigliani and Miller (MM)'s proposition on irrelevance depicts that a company's performance and profitability is not affected by its dividend policy. Talking from the shareholder perspective, shareholders are more satisfied when they receive regular flows of dividends, even in small amounts but the factor of [url=http://www.sandvikfw.net/shopuk.php]hollister sale[/url] regularity ensures their confidence in the company.
An irregular or erratic pattern of dividend payouts can lead to bad image for the [url=http://www.ktbruce.co.uk/barbourjackets.php]barbour.co.uk[/url] company and thus an adverse effect on its share in the market. Considering potential investors and their attitude towards a company's dividend payment patterns or dividend policy, people, according to their stage of investment that is their age, invest accordingly. In the case of stocks, younger or aggressive risk taker individuals invest in growth stocks or stocks that induce [url=http://www.sandvikfw.net/shopuk.php]hollister outlet sale[/url] capital gains rather than a stream of dividends. Investors in retirement stages or in the later faction of their lives invest in less risky income stocks which payout dividends on a continuous basis forming a regular fixed income.
According to The Forbes list 2010 of Global 2000 big publicly listed companies (The Forbes 2011). The company caters to customers and members more than 200 million times weekly at retail units more than 9,880 under 60 different banners in more than 28 countries. With the world's highest sales revenue of US$ 405 billion, it employs more than 2 million employees worldwide.
The consistent growth in dividends of Wal-Mart is a good sign for its reputation [url=http://www.ktbruce.co.uk/barbourjackets.php]barbour[/url] in the market pertaining mainly to its shareholders which count up to 292,983 as of March 26, 2010 (Wal-Mart Stores Inc. 2011). Shareholders, especially of less risk taker nature, demand a persistent stream of dividends as these forms a fixed regular income for them.
Considering the performance of the company, Wal-Mart is one of the biggest giants in terms of revenues all over the globe. Its revenues earned came about to be US$ 405 billion in the year 2010, the highest all over the world, and it has been analyzed that its sales are higher than the GDP of Saudi Arabia, a country that [url=http://www.jeremyparendt.com/Barbour-Paris.php]barbour pas cher soldes[/url] is listed as the 25th [url=http://www.mxitcms.com/abercrombie/]abercrombie[/url] largest economy according to GDP. Wal-Mart's profits were US$ 14.335 billion in the year ended January 31, 2010 of which its payouts were a total of US$ 4.217 billion which makes a payout ratio of 29.42% and a retention ratio of 70.58%.
The company's dividend policy is quite well established and being a blue chip company and the 18th largest publicly listed company in terms of sales, profitability, assets and market value (The Forbes 2011), Wal-Mart has performed up to its reputation and standards by planning out an appropriate dividend payment policy and also at the same time, experiencing phenomenal growth. The company's net sales have accelerated by 7.45% from US$ 373.281 billion in 2008 to US$401.087 billion in 2009.
According to an annual report (2010) ,there has been an overall increase for Wal-Mart's cumulative total return throughout the previous five years. This shows the company's favorable performance in terms of dividend payouts as well as reinvestment of earnings. In this graph, it has been assumed that US$ 100 were invested on February 1, 2005 in shares of common stock of the company and in each of the indices depicted and all the dividends were reinvested. Wal-Mart's common stock has shown reasonable performance relative to the two indices which depict more fluctuations. (Source of graph: Wal-Mart Stores Inc. Annual Report 2010)
Future Dividend Payouts & Policy The company's Board of Directors approved an elevation of 11% in the annual dividend for the fiscal year 2011 to US$ 1.21 per [url=http://www.gotprintsigns.com/abercrombiepascher/‎]abercrombie pas cher[/url] share compared to what was in 2010. This annual dividend has been paid in four quarterly [url=http://www.rtnagel.com/airjordan.php]jordan pas cher[/url] installments on April 5, June 1, September 7, 2010 and January 3, 2011 to holders of shares on record on March 12, May 14, [url=http://www.teatrodeoro.com/hollisterde.php]hollister[/url] August 13 and December 10, 2010 respectively. The company has a permanent dividend policy of issuing dividends every quarter with a yearly growth in the amount.
Investors that are in the consolidation or gift spending phase i.e. those in the later faction of their lives are quite attracted to shares of the nature of Wal-Mart. Those companies which proffer appropriate dividends and that too, on a consistent note and with considerable growth are always in the minds of potential and prospected investors. The dividend policy of Wal-Mart is quite effective and efficient as it satisfies its shareholders and on the other hand, plows back more than 70% of its earnings into the company. It's a thought-provoking factor that such a giant company, if reinvests a considerable share of 70% into its operations, the results which it would show would definitely be mind-blowing.
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