Which one of the following statements appears to be supported by the current dividend policies of U.S.industrial firms?
A)Firms tend to increase the dividend amount per share, even when it's unclear if the increase can be maintained.
B)Investors no longer react to changes, either up or down, in dividends.
C)Newer, high-growth firms tend to pay larger dividends than mature firms.
D)Dividends are still viewed by shareholders as a signal of a firm's future outlook.
E)Managers are no longer hesitant to lower dividend payments.

Question

Quizplus · Accepted Answer

The statement that appears to be supported by the current dividend policies of U.S. industrial firms is that dividends are still viewed by shareholders as a signal of a firm's future outlook. This is evident from the fact that firms still use dividend payments as a way to signal their financial health and future prospects to investors. This is supported by studies that have shown that dividend payments are positively correlated with a firm's future earnings growth and stock price performance.

Which One of the Following Statements Appears to Be Supported