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My topic is Pay dividends (sub topic of Risk Capital and capital allocation)
power point must include introduction and data and examples etc. the presentation need to be 5min long. Also give the speech draft.
the report must be 3 pages long and include the power point.
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Explanation & Answer
I am uploading the presentation and an outline in the next 30 minut
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Pay Dividends
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Pay Dividends
Despite the various tasks of a company’s top executives ranging from budgeting to
financial forecasting, their mandates also involve capital allocation and risk capital. The former
has two significant objectives, to ensure the business’s continued secure operation and optimize
the company’s stock’s long-term fair value per share legally and ethically (Bhandari &
Javakhadze, 2017). Conversely, speculative investments in futures and options trading, day
trading, stock market, equity investment, private equity, corporate borrowing, and swing trading
in stocks and commodities are common uses for risk capital. Most of these markets indirectly
impact venture capitalist’s investment decisions on risk capital.
Private entities’ obligations entail the provision of risk capital, comprising funds
accumulated by high-net-worth individuals and institutions willing to procure shares or equity in
a business. A unique form of private equity is venture capital (VC). Risk and reward are
generally positively linked in such investments: higher risks are associated with higher reward
potential (Deng, Li, & Liao, 2017). For example, an innovation might break even within a short
period and ensure perpetual profitability. Unforeseen circumstances and shifts in consumers’
preferences and tastes might reduce the extent of implementing technology, leading to a negative
profit in the short- and long-term run.
Reasons for Paying a Dividend
Due to regulatory obligations and profits, most publicly traded companies announce
earnings per share after every financial year. For instance, the tech companies with the tendency
of “plowing back profit” to remain competitive in the industry have opted to remunerate
dividends to stakeholders as a strategy of returning dividends to shareholders. Notable examples
include Cisco Systems (CSCO) and Apple (AAPL) adherence to stockholders’ requests. The
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rationale for opting on annual earnings per share concerns market volatility. Therefore, dividend
remuneration protects shareholders from risks associated with the business cycle, like the
undergoing global recession, although the implementation of virtual teams in most sectors has
increased the bottom line of tech corporations.
Another reason for remunerating earning per share centers on reinvestment decisions. In
particular, individuals could utilize their dividends to procure more stock at the prevailing rate
and hoping appreciation in the future depending on the market trend. Retirees can capitalize on
earnings per share to supplement their income (Bhandari & Javakhadze, 2017). However, such
individuals should use their salaries to venture in shares rather than a pension, besides consulting
experts who analyze liquidity and profitability ratios. Thus, individuals can rely on dividends to meet
their daily needs or use them as a retirement savings strategy.
Capital Allocation
In reality, the dividend yield is one of the elements in the quantitative dividend stock
ranking method, the 8 Rules of Dividend Investing. Due to the compelling risk-reward
proposition, investing in earnings per share is more likely to be lucrative. (Deng, Li, & Liao,
2017). According to historical data, investing in the Dividend Aristocrats, Dividend Kings, and
Dividend Achievers categories of stocks would outperform the average market. However, high
dividends hardly reflect the actual business performance considering other factors such as
expansion.
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Figure 1: Dividends: A review of historical returns (Heartland Advisors)
The graphic depicting the output gaps between the S&P 500’s total return quintiles is very
remarkable. The data is equally compelling in terms of...