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Bellamy's Pay-Out Policy At The Bellaware Company

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Pay-out policy is a way for companies to choose between the different ways to pay cash out to their shareholders. Payout policy is the main point of many key questions in corporate finance. The payout policy can be divided into two ways retain and payout. For retain, the company can invest in New projects or increase cash reserves. For payout, it can pay dividends to shareholders and repurchase shares. A firm’s payout policy is shaped by market imperfection such as taxes, agency costs, transaction costs and asymmetric information between managers and shareholders.

I think the pay-out policy is not optimal. It says that the financial posture of BCI was quite conservative and very much keeping with BCI’s long-standing practice and, indeed, with its management style generally. The BCI earned the net income of $53.6 million and the total revenue of $342 million. It is good financial condition for the company. But the company should not just hold it and do not make more benefits. A private equity firm could purchase all of Bellamy’s outstanding shares at a price higher than $16.25 per share, its current stock price. It would then …show more content…

It is a quite strong balance in the industry. For the company is quite profitable for them if they are debt-free. The compounded annual returns for BCI shareholders including dividends and stock price appreciation were nearly 11% per year during 2013 – 2015. It was higher than the ASX S&P200 which required 7% per year. But the rate also below the 16% annual compounded return earned by shareholders of Bellamy’s peer group during the same period. So I think for BCI, it can give the shareholders a special dividend. The special dividend is a one-time dividend payment a firm makes and usually much larger than regular dividend. It can help BCI increase the rate of annual compounded return to its

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