Tax Differential View Of Dividend Policy

Dictionary Says

Definition of 'Tax Differential View Of Dividend Policy'

The belief that shareholders prefer equity appreciation to dividends because capital gains are effectively taxed at lower rates than dividends. Corporations that adopt this viewpoint generally have lower targeted payout ratios, or a long-term dividend-to-earnings ratio, as dividend payments are set rather than variable.

Investopedia Says

Investopedia explains 'Tax Differential View Of Dividend Policy'

Because companies that assume a tax differential viewpoint are focused on share appreciation, they often have more funds available for growth and expansion than companies focused merely on increasing their dividends. The extent of the opinion depends on the tax structure of the region in which the company operates.

Related Video for 'Tax Differential View Of Dividend Policy'

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Tax Benefit

    A tax benefit is ...
  2. Tax Efficiency

    An attempt to ...
  3. Tax Liability

    The total amount ...
  4. Capital Gain

    1. An increase ...
  5. Capital Gains Tax

    A type of tax ...
  6. Dividend

    1. A ...
  7. Dividend Tax Credit

    The amount a ...
  8. Forward Dividend Yield

    An estimation of ...
  9. Dividend Payout Ratio

    The percentage ...
  10. Pooling Of Interests

    A method of ...

Articles Of Interest

  1. Dividends, Interest Rates And Their Effect On Stock Options

    Learn how analyzing these variables are crucial to knowing when to exercise early.
  2. The Power Of Dividend Growth

    Dividends may not seem exciting, but they can certainly be lucrative. Learn more here!
  3. What You Need To Know About Capital Gains And Taxes

    Find out how your profits are taxed and what to consider when making investment decisions.
  4. How And Why Do Companies Pay Dividends?

    Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out.
  5. Is Growth Always A Good Thing?

    Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble.
  6. Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."
  7. Carl Icahn's Investing Strategy

    Buying up failing investments and turning them around helped to create the "Icahn lift" phenomenon.
  8. The Flow Of Company Information

    Learn how to gather all the pieces before you start to put together your puzzle.
  9. 6 Tips For Spinning A PR Nightmare

    One of the most readily available measures that organizations can employ to either avoid or reduce negative publicity is to aim for transparency.
  10. Manage Your Clients' Expectations

    You can't control how they react to the market, but you can help them understand the reality of the situation.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center