Residual dividend approach(redirected from Residual Dividend Approaches)
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable investment opportunities for those funds are currently unavailable.
Residual Dividend Approach
A dividend policy for a publicly-traded company stating that the company will not pay dividends to shareholders unless there are no acceptable investment opportunities for the money that would be paid as dividends. Companies following a residual dividend approach therefore have a high plowback rate. This approach is most common among start-ups that are seeking to establish themselves.