Dividend Policy at Linear Technology | Finance 2013 Page 2 of 13 1. Linear Technology’s Dividend Pay-out Policy Linear Tech announced its first dividend in Oct 13, 1992, and paid the first dividend in Q2 1993. The amount of the dividend is $0.00625/share per quarter (adjusted to stock split). The rationale behind the dividend policy is to show investors that owning Linear’s shares is not as risky as owning shares of most technology companies, and on top of that, to attract dividend income
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competitors in the Semiconductor Index, has a large portion in dividends. Linear has provided a steady dividend payout since 1992 in a gradually increasing rate in small amounts. Linear’s management believes that offering dividends appeals to potential investors, who not only focuses on the growth matters of the firm but also has interests in steady income, and attracts them to purchase shares of the company. They also thought that providing dividends gives a positive signal to the investors meaning “Linear
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WM Wrigley Jr. Company Group #2 Statement of the Problem: The William Wrigley Jr. Company was the world’s largest manufacture and distributor of chewing gum. They are an industry standard for international candy manufacturing and are competitive key players in the global market. William Wrigley Jr. originally founded the William Wrigley Jr. Company in Delaware as a partnership in 1891; it then became a corporation in 1903 based out of Illinois. The Wrigley’s company has been family ran
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Management Summary 2 Active Investor Strategy 2 Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 3 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 3 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 4 Should Wrigley’s directors undertake the recapitalization
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company paying out a regular dividend can be expected to fall on the payment date, not on the record date or the ex-dividend date.” This statement is false. Investors begin to trade their shares on the ex-dividend date after a company has declared its dividend policy, and this is when the stock price of a company can be expected to change or fall. Thus, stock prices fall on the ex-dividend dates to reflect the dividend payment. On the contrarily, on the payment date, dividend checks are mailed to shareholders
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Dividend Policy at Linear Technology from StudyMode Of the 16 companies on the SOX index, six paid dividends and Linear Technology is one of them started at the second quarter in 1993 which is 5.3 million in total. However, in the case, according to Coghlan, “The quarterly dividend was initially set at $0.05 per share. This amounted to $8.3 million, or 15% of FY 1994 earnings.” And their most recent dividend in 2002(cause in the exhibit2, there’s only threes quarter’s data in 2003, so that’s why
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------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Case Studies in Finance ------------------------------------------------- Case 34: The Wm. Wrigley Jr. Company Question 1: In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy? => Blanka Dobrynin is a managing partner of the Aurora Borealis
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as a special dividend, what would be the effect on the share price? On earnings? On earnings per share? What if linear repurchased share instead? What if linear retained entire cash balance? Show your calculations using data from FY 2002 and assume there are no taxes and the interest rate on retained cash is 3%.1 Based on Exhibit 2, Linear Technology has net income of 197.6 million in year 2002. It issued stock of 39.3 million, repurchased stock of 221.6 million and paid dividend of 54 million
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Retained Earnings or Cash Dividends? From the firm’s perspective, net income can be retained and reinvested or else paid out as cash dividends. The opportunity cost of one alternative is the other alternative. We already saw this when covering the cost of capital. Remember the cost associated with retained earnings (internal equity)? It was the going rate of return on the firm’s stock, since that is what we expect that the stockholders could earn if they were paid cash dividends that they would reinvest
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whether to Repurchase Share or to pay Dividend. In the wake of introduction of new products and foreign expansion, firm has to raise capital as suggested in the case of $3 billion debt, which will influence the Wm. Wrigley Jr. ‘s outstanding shares, shall it repurchase them or pay dividend to its shareholders. It also has to see the impact of this debt on the share price, the voting control of the Wrigley company, impact on EPS. Analysis: Impact on Share Price Before taking the debt the share price
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