What is Irelevance's dividend theory?

The theory of Dividend Irlevance is a concept that is based on the assumption that the dividend policy of the company should not be considered particularly important to investors. Furthermore, the conditions of this dividend policy should not have any impact on the shares of shares issued by this company. With this particular financial theory, the idea that investors can always sell part of their shares if they want to generate a certain amount of cash flows. As with most investment theories, Dividend Theory has a share in supporters and detectives.

among those who have found that IRelevance theory of dividends has merit, is the common attitude that many investors use dividend payments to purchase multiple shares, increasing the share that the investor has in the company. The same general effect could be achieved unless dividends are issued and these funds are invested in various projects and activities that eventually increase the value of the ts. BecauseThe fact that the investor benefits from one scenario should not be worried about the dividend policy of the company in one way or another. In the end, the impact will be the same.

For investors who disagree with Dividend Irelevance, one of the points of the dispute that by not taking into account the type of dividend policy that the company adheres to, the investor has no opportunity to make investment decisions that are in line with his financial objectives. For example, if an investor wants to create a stable money flow from investment that can be used for everyday living costs, the purchase of securities where dividends are paid on a certain type of consistent foundation, will lead a long way to determine this required cash flow. If the investor does not consider dividend policy before purchasing shares, there is a good Chance that this goal will not be met even if the shares value may increase because the company will turn away resources to extensionbusiness.

Detractors also point out that investors usually look at a dividend policy associated with potential investments, simply because there are tax consequences. This means that the investor must determine how the policy associated with the investment will increase or reduce the tax tax when they become payable. If policy is likely to raise taxes without the opportunity to create a sufficient return to make the acquisition useful, then the investor will want to look at other stocks and find out whether the dividend policy associated with this security would be more favorable. If the investor adheres to the theory of Dividend Irevance, there may be a large and somewhat unexpected tax burden that must be resolved. Here, supporters note that this can be managed by selling shares of shares that have been value and effectively compensated for additional taxes.