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ACC 291 Week 3 DQ 3

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Week 3 DQ3
Discuss the different types of dividends that a corporation may issue. Discuss why a
corporation should issue dividends and discuss what dividend you would prefer.
The types of dividends that a company may issue are: cash dividends, where the company receives
a check shortly after the declaration. There are also property dividends, these are forms of
compensation other than cash. For example, merchandise, real estate, a commodity, or another type
of asset. Then you have liquidation dividends, these are dividends that are issued at a rate from
paid-in-capital rather than being based on retained earnings. Finally, there is stock earnings, when a
company issues it's own stock to its stockholders.
A company should only pay dividends if it is unable to reinvest its cash at a higher rate than its
shareholders (owners) of the business would be able to if the money was in their hands. If a
company was earning 25% of equity with no debt, management should retain all the earnings
because the average investor probably won't find another company or investment that is yielding
that kind of return.
I think that as a shareholder of a company that I would want to receive a quick return on my
investment, and if that were the case, I would prefer to receive cash dividends. If I had a long-term
interest in the company I would also like to receive cash, but would probably like to receive stock
dividends on occasion. And if the company’s revenues were projected to be lower in coming years I
would likely opt for liquidation dividends, so that I would be getting some sort of return on my
investment.
ACC 291

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Week 3 DQ3 Discuss the different types of dividends that a corporation may issue. Discuss why a corporation should issue dividends and discuss what dividend you would prefer. The types of dividends that a company may issue are: cash dividends, where the company receives a check shortly after the dec ...
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