Residual Dividend

外汇网2021-06-19 14:06:06 109

The term residual pidend refers to a method of calculating pidends. A pidend is a payment made by a company to its shareholders. It is essentially a portion of the company's profits that is pided amongst the people who own stock in the company. A residual pidend policy is one where a company uses residual or leftover equity to fund pidend payments. Typically, this method of pidend payment creates volatility in the pidend payments that may be undesirable for some investors.

Taobiz explains Residual Dividend

Companies that use the residual pidend policy first use the cash flow to fullfill necessary capital expenditures and the remaining amount available (the residual) is paid out to shareholders. Also, if the company is maintaining a certain target debt to equity capital structure, then the full amount of the capital expenditure will not be paid entirely by equity but also with part debt.

Residual Dividend

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