Residual Dividend Policy Implications

Consider a company that has followed a stable dividend policy over the past decades, maintaining a constant dividend payout ratio despite fluctuations in its earnings. Recently, the management has begun to discuss changes to this policy, suggesting that they might shift towards a more residual dividend policy, where dividends will be contingent on the availability of excess cash after all profitable investment opportunities are financed.

Which of the following statements is most aligned with the implications of the residual dividend policy theory?