Dividend Payout Policy
Module 4 – SLP: Leverage, Capital Structure, and Divided Policy, CAPITAL STRUCTURE, AND DIVIDEND POLICY
Review the 1) dividends for the past three years and 2) capital structure of the company you have been researching for your SLP assignment. Then answer the following questions in a Word document (except for the Excel portion specifically noted). The paper should be 2 pages in length.
1. What has occurred with your selected company’s dividend payout, dividend yield, and dividend per share over the past three years? Do you have any explanations for what has occurred? Also, has this company had any stock splits or stock repurchases in recent years?
2. How does your selected company’s dividend payout, dividend yield, and dividend per share compare with other companies in its industry? Has the company’s dividend strategy been similar to other companies in its industry?
3. Use Excel to plot your selected company’s earnings and dividends over the past three years. Do you notice any patterns? What dividend policies from the background readings best match these patterns?
SLP Assignment Expectations
• Answer the assignment questions directly.
• Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.
• For computational problems, make sure to show your work and explain your steps.
• For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. Citation and reference style instructions are available at Trident University's Introduction to APA Style, 7th edition . Another resource is the “Writing Style Guide,” which is found under “My Resources”
Dividend Payout Policy
Name
Institution
Course
Affiliation
Due Date
Dividend Payout Policy
Like most technological and automotive companies in their early phase, Tesla does not offer dividends as they prioritize growth over dividends. Tesla has traditionally reinvested its earnings back into the company for research and development, expanding production capacity, and other strategic initiatives rather than distributing dividends to shareholders. The retention of earnings helps to fund the company’s ambitious plans and maintain a competitive edge in its industry. Notably, the need to forego dividend payment is informed by Tesla’s operation in a fast-growing industry that demands a significant capital investment. Additionally, Elon Musk's long-term vision for the company entails making significant investments in electric vehicle technology and renewable energy solutions, which may take precedence over dividend distributions in the near term (Market Insider, 2022). Tesla is keen to accelerate the world's transition to sustainable energy.
Notably, Tesla has experienced two stock splits. On August 31, 2020, Tesla had a stock split of 5:1 with another stock split reported on August 25, 2022, of 3:1. Tesla's two stock splits have resulted in a cumulative multiple of X15. The primary motivation behind Tesla's stock splits was to make its shares more affordable and accessible to a broader investor base. By reducing the share price through a stock split, Tesla aimed to attract smaller individual investors who may have been deterred by the relatively high price of its shares. The increased accessibility could potentially generate more demand for Tesla's stock. On the other hand, NIO, Lucid Motors, and Rivian, Tesla's competitors in the electric vehicle industry, have not reported any stock splits as of the current information available.
Similar to Tesla, competitors such as NIO, Lucid Motors, and Rivian in the electric vehicle industry have not offered dividend payouts to their shareholders. The decision of NIO, Lucid Motors, Rivian, a...