[Verse 1]
The board room's buzzing with a big decision
Cash is flowing, profits are high
Do we pay the shareholders their division
Or keep the money for projects to try
Residual theory says pay what's left over
After we fund all our positive NPV
But clientele effect shows some prefer
Steady dividends consistently
[Chorus]
Pay or retain, it's the dividend game
Cash to shareholders or reinvest the gain
Stock splits and buybacks, the options are clear
DRIP plans and special dividends here
Pay or retain, remember the name
Dividend policy drives the financial game
[Verse 2]
Miller and Modigliani said it doesn't matter
In perfect markets, value stays the same
But real world friction makes the theory scatter
Taxes and costs change the dividend game
Signaling theory shows the market's watching
When dividends rise, stock prices follow
When cuts are announced, investors are dropping
Think the company's future is hollow
[Chorus]
Pay or retain, it's the dividend game
Cash to shareholders or reinvest the gain
Stock splits and buybacks, the options are clear
DRIP plans and special dividends here
Pay or retain, remember the name
Dividend policy drives the financial game
[Bridge]
Stock dividends are just accounting entries
No cash changes hands but shares increase
Two-for-one splits make prices friendly
Double the shares, half the price at least
Share repurchase is the modern way
Buy back stock with excess cash in hand
Tax efficient for shareholders today
Capital gains beat dividends as planned
[Verse 3]
Consider the life cycle of your corporation
Mature firms with stable cash should pay
Growth companies need capital preservation
Reinvest returns for a brighter day
Regular, extra, special, or liquidating
Four types of dividends you can declare
Record date and ex-dividend calculating
Payment date when cash flows through the air
[Chorus]
Pay or retain, it's the dividend game
Cash to shareholders or reinvest the gain
Stock splits and buybacks, the options are clear
DRIP plans and special dividends here
Pay or retain, remember the name
Dividend policy drives the financial game
[Outro]
From payout ratios to retention rates
The CFO must carefully decide
Balance growth with what the market celebrates
Keep shareholders happy and satisfied