What are the four types of dividend policy?

Written by Admin | Last Updated: August 2026

Corporate financial management frameworks typically identify four primary approaches to distributing earnings to shareholders. Constant Dividend Payout Policy maintains a fixed percentage of net earnings paid out as dividends each year regardless of income fluctuations. Stable Dollar Dividend Policy focuses on paying a steady, predictable cash amount per share over time, raising it only when long-term earnings growth is secured. Residual Dividend Policy treats dividends as a secondary use of funds, paying out only what remains after all profitable capital investment projects and reinvestment needs are fully satisfied. Low Regular Plus Extras Policy combines a secure, minimal baseline dividend with additional bonus payouts during periods of exceptionally high corporate profitability.

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