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 ... 
Earnings Per Share  EPS
The portion of a company's profit allocated to each outstanding ... 
Net Present Value  NPV
The difference between the present value of cash inflows and ... 
Earnings Surprise
Occurs when a company's reported quarterly or annual profits ... 
Dividend Payout Ratio
The percentage of earnings paid to shareholders in dividends. ... 
Dividend Policy
The policy a company uses to decide how much it will pay out ...
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