Answer to Question #249986 in Management for Comfort

Question

In setting a company's dividend policy, why is the stability of the dividend stream of particular importance?

Answer 1

A business with a stable dividend policy pays out a steady dividend every given period, regardless of the volatility. It indicates the level of risk associated with the price changes of a security. Investors and traders calculate the volatility of a security to assess past variations in the prices in the market.