Provide 1 response to each student post. Each response should be 150 words each. Turnitin and Waypoint is being used to check for plagiarism and Please use APA format. Please pay close attention to...

Timothy Mccranie

For 2018, Ford paid out a dividend on earnings at a rate of 6.8% or $0.15 per share. Ford pays dividends on a quarterly basis with a payout ratio of 46.9%. Regular dividends are generally paid on approximately the same dates year after year and most U.S. firms that pay dividends follow the constant dollar dividend policy, in which the company pays the same dollar amount every year.

Ford Motor Company’s dividend policy embodies an implied promise to shareholders to continue paying dividends, year after year, at or above the current systematic dividend level. By following the constant dollar policy, they will have a dividend payout that follows a stair-step pattern (Byrd et al, 2013).

I agree with Ford’s choice of dividend distribution. Ford has had an excellent record of predicting dividends since 2011 - typically getting 80% of their forecasts exactly right or within a small margin. This policy is generally preferred by those persons and institutions that depend upon the dividend income to meet their living and operating expenses, increases and decreases in market values may even be of little concern to these investors, and this condition tends to produce a steady long-run demand that automatically stabilizes the market value of the share (Chand, n.d., para. 11).

In perfect capital markets, the mix of financing used to fund investment decisions is considered irrelevant to shareholders (Byrd et al, 2013, sect. 9.1, para. 6). The dividend policy of Ford is unaffected in the perfect capital market since the cash flows it generates. Dividends are generated from profits of the cash flow. In the imperfect capital market, the dividend policy remains irrelevant if there are enough high-dividend income and growth stocks to satisfy demand for each. Ford has a steady demand of products but has an average dividend payout. Ford’s dividend policy does not affect the value of the company.

The dividends paid out by Ford over the past five years and its yield.

2014 .50/12.21 = 0.040 or 4.0% yield
2015 .60/11.95 = 0.050 or 5.0% yield
2016 .85/10.72 = 0.079 or 7.9% yield
2017 .65/10.57 = 0.061 or 6.1% yield
2018 .73/9.93 = 0.073 or 7.3% yield

Ford recorded record profits in the years of 2015 and 2016 fueled by a fast recover of the domestic market. Ford’s dividend yield remains consistently higher than the consumer goods average, although this alone hasn’t been enough to boost its standing among yield-seeking investors. But Ford’s is seeing a market share growth in the Chinese market. Ford is investing heavily in electric and autonomous self-driving vehicles. These initiatives are keeping Ford fairly steady across the ticker.

Reference

Byrd, J., Hickman, K., & McPherson, M. (2013).
Managerial Finance
[Electronic version]. Retrieved from https://content.ashford.edu/

Chand, S. (n.d.). Dividend Policies: Advantages and Disadvantages of Stability of Dividends. Retrieved from http://www.yourarticlelibrary.com/financial-management/dividend-policies-advantages-and-disadvantages-of-stability-of-dividends/29424

Ford. (2019). Financials. Retrieved from https://shareholder.ford.com/investors/financials/annual-reports/default.aspx

Matthew Rompca

Revisit the company you chose for your Week 6 Final Project. Using the annual report and other sources such as a 10k or 10q’s, discuss the dividend policy of your company.

Answer the following questions as part of your response:

• 
  How would you describe your chosen company’s dividend policy?
  
  Samsung recently announced that they would be increasing shareholders profit from their dividends to give the shareholder the ultimate experience. From 2018-2020, this will be roughly around $25.8 billion. The SEC had also cancelled all the common and preferred shares held in the treasury.


• 
  Why do you believe this company chose the dividend policy they have in place?
  
  I do believe that they chose this policy shows their shareholders that they can be still be a big tech giant yet still care about their customers by expanding their wealth.


• 
  Do you agree or disagree that they have selected the best dividend policy for the company?
  
  I do agree that they did select the best policy since it shows humility. It also shows that no matter how much money is made, that they are willing to give back to the people who made it possible, their customers.
  
  
  
  
  


• 
  How might this dividend policy function in both perfect and imperfect capital markets?
  
  This dividend policy would not hold up in an imperfect capital market since it is influenced by buyers and sellers. If everyone stopped buying Samsung products, their stock drops thus affecting the dividend price to shareholders. During a perfect capital market, the price might increase since there is constant cost of capital and unlimited funds.
  
  
  
  


• 
  Calculate the dividend rate over the past 5 years. Define why you believe that it has or has not changed over the last 5 years.
  
  The attached snapshot is taken from Samsung’s website. The dividend rate has gone up because of their initiative to enhance shareholders by giving them a bigger payout as mentioned above. This number will increase in 2019-20 as it nears the maturity of their project.

Byrd, J., Hickman, K., & McPherson, M. (2013).

Managerial finance

[Electronic version]. Retrieved from
https://content.ashford.edu/(Links to an external site.)

Shareholder Return │ Stock │ Investor Relations │ Samsung Global. (2019, April 30). Retrieved from
https://www.samsung.com/global/ir/stock-information/shareholder-return/(Links to an external site.)