In the manufacturing industry, which is highly capital-intensive, it is generally advisable for a company to retain the majority of its profits. However, in the case of a mold packaging company, it is distributing 37% to 45% of its profits as dividends. Over the past 10 years, the company has been raising funds through debt, and in the last 3-4 years, it has also started raising funds through equity.
My question is: why is the company paying a 35% to 40% dividend while simultaneously raising external funds? Wouldn’t it be more prudent for the company to reduce its dividend payout and use those funds internally?
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