In the real world, which statement regarding dividends is true?
A) They are usually more stable than earnings.
B) They fluctuate more widely than earnings.
C) They tend to be a lower percentage of earnings for mature firms.
D) They are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending on whether earnings increased or decreased.

Question

Quizplus · Accepted Answer

Dividends are usually more stable than earnings because companies tend to smooth dividends over time, maintaining them even when earnings fluctuate, to provide consistent returns to shareholders.

In the Real World, Which Statement Regarding Dividends Is True