Presentation divident policy

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Fahmida Khanam

ID No:11326086

Batch: 26 th

Initially City Bank was established in the year of 1983.

Listed Dhaka Stock Exchange Commission in the month of February 03, 1986 and Chittagong stock exchange of December 27,1995

Market category-A Market lot-50 Face Value-10Tk

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Introduction of Dhaka City Bank Ltd

Dividend: Portion of a firm’s earnings which are paid out to the shareholder.

Process of Dividend Payment: Cash Dividend Stock Dividend

Dividend Theory: Dividend Relevance Theory Dividend Irrelevance Theory

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Types of Dividend Policy

(1) Constant- Pay out–Ratio: A dividend policy based on the payment of a certain percentage of earnings to owners in each dividend period.

(2) Regular Dividend Policy: A dividend policy based on the payment of a fixed-dollar dividend in each year.

(3) Low regular and Extra Dividend Policy: A dividend policy based on paying a low regular dividend, supplement by an additional dividend when earning are higher than normal in a given period.

year Net Income

growth

2009 818.72 .4234

2010 1870.22 .614

2011 2056.13 .1654

2012 794.45 .424

2013 490.23 .060

year Cash divideper year

Stock Dividend

2009 25%2010 30%2011 25%2012 10%2013 20%

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0%

5%

10%

15%

20%

25%

30%

35%

2009

2010

2011

2012

2013

divi

dend

year

Stock dividend

Stock dividend

year Cash dividen

d

EPS Dividend

Payout Ratio

2009 52.11 40.142010 6 45.212011 4.07 40.032012 1.26 30.42013 0.71 25.06

Dividend & Stock price

Year % Dividend

Stock Price

Net Income

2009 25 700 818.722010 30 60 1870.222011 25 40 2056.132012 10 30 794.452013 20 25 490.23

Year Stock Dividend

Stock Price (in tk)

2009 25% 700

2010 30% 602011 25% 502012 10% 402013 20% 25

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Year Year end P/E

% Dividend Dividend Yield

2009 17.49 30% B N/A

2010 23.16 25% B N/A

2011 16.18 25% B N/A

2012 23.51 10% B N/A

2013 34.24 30% B N/A

We also found that they paid stock dividend and fluctuation percent of stock dividend in every year. When their net income increase pay out ratio also increase. So we can say that City Bank follow their own set of dividend policy, which on the basis of net income.

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According to the above information city bank Ltd. should fully use the regular dividend policy. As a result their earnings per share will increase, market value will also increase. They should also increase the percentage of dividend. As well as they have to consider their reinvestment opportunities.

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