Deliberating on dividend policy

For the vast majority of larger public companies, dividend policy is an important component of maximizing shareholder value. Dividend policy's most important uses are to: 1. Return excess cash to shareholders. 2. Effectively manage the company's cash needs and capital structure. 3. Credibly signal shareholders about future earnings prospects. Policy recommendations are provided and include: 1. Dividend policy should be viewed as part of an integrated financial plan. 2. Use the dividend as the primary vehicle to distribute cash to shareholders. 3. Use the dividend to appropriately signal shareholders about future prospects.