Lintner's Model
A model stating that dividend policy has two parameters: (1) the target payout ratio and (2) the speed at which current dividends adjust to the target. Investopedia Says:
In 1956 John Lintner developed this theory based on two important things that he observed about dividend policy:
1) Companies tend to set long-run target dividends-to-earnings ratios according to the amount of positive net-present-value (NPV) projects they have available.
2) Earnings increases are not always sustainable. As a result, dividend policy is not changed until managers can see that new earnings levels are sustainable. Related Terms:
Dividend
Dividend Payout Ratio
Dividend Policy
Earnings
Earnings Estimate
Earnings Per Share - EPS
Earnings Surprise
Financial Modeling
Net Present Value - NPV |