Dividend policy

Dividend policy - the policy of a joint-stock company in the field of distribution of company profits, that is, distribution of dividends between shareholders. The dividend policy is formed by the board of directors. Depending on the goals of the company and the current / forecasted situation, the company's profit can be reinvested, written off to retained earnings or paid in the form of dividends. The term "dividend policy" in principle is associated with the distribution of profits in joint stock companies. However, the principles and methods of profit distribution considered in this case are applicable not only to joint-stock companies, but also to enterprises of any legal form. In this regard, financial management uses a broader interpretation of the term "dividend policy", which is understood as the mechanism for forming the share of profit paid to the owner in accordance with the share of his contribution to the total equity of the enterprise. Also, the dividend policy is an integral part of the general financial policy of the enterprise, which consists in optimizing the proportion between consumed and capitalized profit in order to maximize the market value of the enterprise.