Question

Which of the following are positives of paying dividends?

O cash dividends can underscore good results.
O stock price usually increases with the announcement of a new or increased dividend.
O dividends are taxed to recipients.
O dividends can reduce internal sources of financings.

Answer 1

The positives of paying dividends include cash dividends underscoring good results, stock price usually increasing with the announcement of a new or increased dividend, and dividends reducing internal sources of financing.

Step-by-step explanation:

The positives of paying dividends include:

• Cash dividends can underscore good results: When a company pays dividends, it shows that it is generating profits and has excess cash to distribute to its shareholders.
• Stock price usually increases with the announcement of a new or increased dividend: Investors often view dividends as a positive sign and may buy more shares, leading to an increase in the stock price.
• Dividends can reduce internal sources of financing: By distributing a portion of profits as dividends, a company can reduce its reliance on internal financing for growth and expansion.

Based on the given options, the correct answer is:

O cash dividends can underscore good results.