ABSTRACT
A dividend policy on the basis of a sector is pretty rare and each of the dividend policies may exist across industry sectors. A constant dividend payment ratio policy is a dividend policy whereby a corporation establishes a dividend payout ratio and applies this to earnings. This policy ensures that retentions as well as dividends fluctuate with earnings, but with given investment plans, outside finance will sometimes be required and reserves will be affected by dividend policy. A long-run residual dividend policy is a policy designed to give shareholders some confidence in planning the dividends that might be declared. Such a policy is created by a corporation by first forecasting the relevant variables, such as earnings, investment needs, interest charges and taxation usually five years. Then the dividends from a pure residual dividend policy are determined, total dividends over all years are compared with total earnings over the same period and an average dividend payout ratio is determined.
