(Case Report)
Subject:FPL Group Dividend Policy
puzzle: Certain industry qualifys and market announcements have indicated that FPL will change its dividend policy. An Analyst First comeliness Securities Corporation, Kate Stark, is unsure to which recommendation to control to clients as the besotted could perform a number of contrasting actions in regards to dividend policy.
Alternatives:
1. Recommend Hold the rip
2. Recommend Sell the Stock
3. Recommend Buy the Stock
(See appendix 1 for discussion for alternatives)
testimonial:
Based on the 3 scenario dividend discount model and needy Cash Flow Equity Model we conducted it is highly verisimilar that FPLs share price is going to lead. Since the hard is going to be subjected to increased competition, and the price of shares in the industry is rude(a) to the dividend payout policy. Therefore, we Ms. Stark to inform her clients of this and recommend sell. Then rebuy the stock later the price has fallen. If possible she should tell investors to short sell the shares to part benefit of the fall in the price. The price is going to fall irrespective of changes in the dividend policy and will fall more than if the dividend payout is reduced.
Analysis
Introduction & Current Situation
The Florida Power & Light Company, FPL Groups largest subsidiary, holds one of the lowest retention ratios in the industry; the firms dividend payout is extremely high at around 90% at year close. Whilst this makes shareholders happy and boosts stock price both(prenominal) external issues and changes in hawkish dynamics is making the firm release statements about a change in dividend policy. This puts up a red flag for Ms. Kate Stark of First Equity Securities Corporation, and brings three possible firm actions the she could take into consideration.
Industry Environment
The deregulation of the utilities industry has brought about increased competition and intensive competitive rivalry....If you want to get a full essay, order it on our website: Orderessay
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