Analysis of Dividend Policies in ST ENGINEERING CO.

RUNNING HEAD: DIVIDEND POLICIES
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UNIVERSITY NAME
STUDENT NAME
COURSE
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DIVIDEND POLICIES
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EXECUTIVE SUMMARY
The purpose of this report is to analyze the annual reports ST ENGINEERING CO. and examine
the dividends policies adopted by the company in relation to dividend payout to its shareholders.
Earnings per share distributed to shareholders are critically analyzed for previous years, current
year and future projection. The report also make revenue forecast for the company for the next
year that is 2019.critical discussion of its sales volume and net income levels are clearly
highlighted for the previous, current and future. Based on the projection, it is observed that the
sales volume of the company might be to 6.59B in 2019.the net income value also fluctuates
considerably.
Dividend payout does not necessarily indicate good performance of the company but instead
send a key information to the outside world on how the company is performing (Baker &
Jabbouri, 2016). For instance, high dividend payment level indicates that the company pays a
proportionately large amount of its income into dividends and reinvest less and vice versa (Abor
& Bokpin, 2010).
Dividend payout also affects the retained earnings of the company since they are paid out of
this.it is common knowledge that every company should pay dividends out of its earnings and
not out of its assets. This is to protect the interests of third parties like the creditors (Wei & Xiao,
2009).

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Table of Contents
INTRODUCTION........................................................................................................... 4
NON-FINANCIAL.......................................................................................................... 4
FINANCIAL.................................................................................................................. 4
HOW DIVIDEND PAYOUT AFFECTS FINANCIAL AND NON-FINANCIAL ASPECT,................5
DISCUSSION OF DIVIDEND POLICIES.............................................................................6
MM APPROACH......................................................................................................... 7
CLIENTELE EFFECT................................................................................................... 7
SIGNALING HYPOTHESIS........................................................................................... 8
FORECASTING COMPANY’S REVENUES.........................................................................8
ADVICE ON THE NEXT DIVIDEND PAYOUT OF ST ENGINEERING.....................................9
DIVIDEND YIELD.......................................................................................................... 9
CONCLUSION............................................................................................................. 10
REFERENCES.............................................................................................................. 11

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INTRODUCTION
ST ENGINEERING CO is a listed company in the Singapore stock exchange which means they
float their shares publicly through prospectus issue.it is a company that is in technology industry
and specializes in defense, aerospace, electronics, land and marine technology. The company
does not have any predefined dividend policy regarding payment of its shares since it is argued
that dividends payouts is affected by many factors such as the need to hold cash and future cash
flows needs of the company so as to meet its obligations as and when they fall due.it is also
observed that the company payment of shares fluctuates from one year to another based on the
earnings of the company.
NON-FINANCIAL
Innovation-this refers to entity’s capability to bring a new product or service into the,
marketplace. This determine the success of that company and survival in the industry. This will
also create more value to its clients and therefore increase its revenue (Ozuomba, Anichebe &
Okoye, 2016).
Firm size (market share)-this refers to the size that a firm occupies in the marketplace. Increase
in the market share leads to increase in earnings of a company due to increased sales.
industry-this is the whole marketplace that the company operates in
Ownership structure-this refers to whether the company has a large level of promoter holding or
not.
Shareholders-this are owners of the company who have invested in the company with an
expectation to get return
Legal rules-this are laws and regulations put in place so as to protect shareholders and creditors
of the company
FINANCIAL.
Return on assets-this refers to the rate at which investments generates incomes to the
shareholders. Every shareholders expects an earning from every shilling that he/she invest into
the business and therefore return on assets is that part of revenue generated by the assets invested
(Al-Malkawi, Rafferty & Pillai, 2010).