Dividend Policy of Fpl

Dividend Policy of FPL, Inc. Background: FPL Group, is the parent company of Florida Power & Light, Floridas largest electric utility. FPL has seen conse editive growth patterns since its inception cod to a heavily regulated market and efficiencies, headed by hot seat Marshall McDonald until 1989. Following his retirement in 1989, FPL experienced a re-structure of its businesses and operations ran by his replacement, James Broadhead. At FPL, Mr. Broadhead brought forth a commitment to quality and customer service, increased its focus on the utilities industry, expanded capacity, and improved its boilers suit cost position. This later reply was the selling off of many a(prenominal) of FPLs non-utilities businesses. Problem: collect to deregulation in the current utilities market, FPL, had been undergoing many changes within its admit organization. With the recent Executive turnover and the resulting sell off of many company assets, FPL had been contemplating the decision to downgrade its dividend payout. This would be the first cut to dividends in close to 50 years. This can particularly be attributed to the ever evolving competitive utilities market. Analysis: Companies in large sectors normally pay dividends in order to gain shareholders and generate funding.

As noted in the case, utilities gain the investor whom looks for a steady payout alternatively than substantial growth spurts. Advantages to reducing a current dividend indemnity are such as it reduces the dividend payout ratio decrease overall risk. Further advantages are that by decreasing its payout ratio whitethorn increases its ability to retain revenues and plan for future growth. Conversely, a decreasing ratio could imply instability within the market place, resulting in a decreased stock valuation, resulting in an overall disallow market reaction. Furthermore, despite a history of volatile earnings, FPL has kept up(p) an inappropriately high payout ratio, thereby creating additional risk for the shareholders. tho a... If you want to get a full essay, order it on our website: Ordercustompaper.com

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