Q » What is residual dividend model?

06 Dec, 2025

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A » The residual dividend model is a financial theory suggesting that a company should pay dividends only after all acceptable investment opportunities have been financed. Under this model, dividends are considered a residual, meaning they are distributed after the company has met its capital expenditure and working capital needs, ensuring that the firm maximizes its investment potential before returning profits to shareholders.

Michael

06 Dec, 2025

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All Other Answer

A »The residual dividend model is a dividend policy where a company pays dividends from its residual earnings, which are the earnings left after meeting its capital expenditure and working capital requirements. It prioritizes investment opportunities over dividend payments, distributing remaining earnings to shareholders.

David

06 Dec, 2025

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