The amount of a
dividend that a
publicly-traded company decides to
pay out to
shareholders. The dividend policy may change from time to time. Factors affecting a dividend policy include the company's
earnings for the relevant period and its expected performance in the near future. Many companies, especially
startups, have a rather stingy dividend policy because they
plow back much of their earnings into further development. Established companies, such as
blue chips, tend to have relatively liberal dividend policies. However, some research, notably
Miller and Modigliani's irrelevance proposition, suggests that a company's dividend policy does not impact its performance in any way. See also:
Dividend clientele, Signaling approach (on dividend policy).