How to define a dividend policy

Dividend policy is a form of document that is designed by the management and decision makers of the company to decide the amount of dividend that must be paid to the investors. When a company shows growth in its profit and other related outcomes several investors and shareholders want to invest in the company to take advantage from the increased value of the shares of the company. When a company is in growing process it means that it is rapidly consuming cash invested by the stockholders and investors so there is no dividend during the growth of the company. A company issues a dividend when it has achieved a certain maturity in its growth and now the profit generated is enough to grant dividends to the investors. Some of the investors think that company is no more in growing mode and it is no more a growth orient

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