DEFINITION of 'Lintner's Model'
A model stating that dividend policy has two parameters: (1) the target payout ratio and (2) the speed at which current dividends adjust to the target.
INVESTOPEDIA EXPLAINS 'Lintner's Model'
In 1956 John Lintner developed this theory based on two important things that he observed about dividend policy:
1) Companies tend to set longrun target dividendstoearnings ratios according to the amount of positive netpresentvalue (NPV) projects they have available.
2) Earnings increases are not always sustainable. As a result, dividend policy is not changed until managers can see that new earnings levels are sustainable.
RELATED TERMS

Dividend
A distribution of a portion of a company's earnings, decided ... 
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The difference between the present value of cash inflows and ... 
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Occurs when a company's reported quarterly or annual profits ... 
Earnings Estimate
An analyst's estimate for a company's future quarterly or annual ... 
Earnings
The amount of profit that a company produces during a specific ...
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