Trend in Dividends. Many corporations attempt to maintain a sustained rather than a fluctuating cash dividend per share payment. The payment is gradually adjusted to changes in earnings over time. As...

Trend in Dividends. Many corporations attempt to maintain a sustained rather than a fluctuating cash dividend per share payment. The payment is gradually adjusted to changes in earnings over time. As a consequence, corporations apparently establish a target payout ratio range. Explain why corporation managements desire sustained cash dividends per share with an increasing trend and attempt to avoid fluctuating cash dividend payments. (CMA, adapted.)