Below is given a discussion. Please reply to the following discussion below. You

Question

Below is given a discussion. Please reply to the following discussion below. Your reply should include whether you agree or diagree, why? what are your reasons behind agreeing or disagreeing? Whether the facts selected are wrong or right. Please answer in atleast 150 to 200 words.

question: From the scenario, examine the dividend rate that TFC is paying in order to determine if the company should receive a rate adjustment. Suggest whether TFC’s dividends should either (1) stay the same; (2) be increased; (3) or go down. Provide a rationale for your response.

discussion: TFC is paying a $10.00 per share dividend rate annually. When TFC is considering the amount and frequency of the payout for dividends they must consider what they will need for future earnings growth, as that is what should be left after they determine the fair and correct amount for a dividend and frequency of a payout. High growth firms early in their life usually have a very low or zero payout ratio. As they mature, usually you will they will tend to return more of the earnings back to its investors.

The average rate was 74.20% and in the 1990’s it remained somewhere around 23.2%, a fraction of what dividends used to be. They should remain at $10.00 per share per year. I feel like if they can afford this in the midst of their expansion, they can almost promise on the back end of the expansion a higher and maybe more frequent dividend payout to their investors. I think the investors will appreciate keeping the payout where it is considering the company’s growth.

Explanation / Answer

TFC is paying a dividend that can increase the satisfaction of the investor and will reduce the agency conflicts. The dividend payment for the company should remain same and will not increase. The company should try to increase the cash from other sources and should not decrease the dividend payments. To increase the cash positions, the company will manage the cash schedule and should not decrease the rate of dividend payment.

            The rate of dividend payment of TFC should remain same as the company is generating cash flows and restriction of the payment of dividend will not hamper the cash inflow instead it will increase the trust of the investors in the company. The dividend payment will be beneficial for the company in the long run period.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.