Question

discussion topic :-please describe (along with a rationale) the dividend payout policy you would prefer as an investor:-

first person :-

As an investor, I would prefer a regular dividend policy. When buying stocks, I would want a company that is going to pay out dividends which would be a source of income for me. I would also like to see that the company is growing over time and that their stock price is increasing so that if I ever wanted to sell my shares, I could sell them for more than I bought them for. To me, at a young age, cash on hand is important because I would like to start as many diversified investments that I can.

please response to the first person :- 90-100 words

Answer 1

As a young investor, I would be preparing lower dividend and a low payout ratio on dividend, because I would more inclined towards investment into such companies who are growing and investing their profits back into the business rather than paying much of the amount as dividend. Generally, I would be focused on investment into highly growth oriented companies who will be investing their profits back into the business. This approach of lower payout will be helpful for me in capital appreciation in the long run and achieving my ultimate aim of financial independence.