Under the residual theory of dividends, Dividends are a residual after investment financing needs...

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Finance

  1. Under the residual theory of dividends,
    1. Dividends are a residual after investment financing needs are met.
    2. Earnings remaining after paying preferred stock dividends should be paid to common shareholders.
    3. Dividend payments are a constant percentage of earnings.
    4. A dividend is the residual amount above the payout ratio.

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