Desire for Current Income

A factor favoring a stable policy is the desire for current income by investors such as retired persons and widows, for example view dividends as a to meet their current living expenses. Such expenses are fairly constant from . Therefore, a fall in dividend will necessitate selling shares to obtain funds to expenses and, conversely, reinvestment of some of the dividend income if dividends. For one thing, of the income conscious investors may not like to D/P into for current consumption. Moreover, either of the alternatives involves. convince transaction costs in terms of brokerage, and other expenses. These costs are avoided stream is stable and predictable. Obviously, such a group of investors may be a higher share price to avoid the inconvenience or erratic dividend payments which budgeting. They would place positive utility on stable dividends.

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