Dividend policy at fpl group inc case analysis

The firm pays the dividend to all shareholders of record on the record date. Because it takes three business days for shares to be

Dividend policy at fpl group inc case analysis

Research papers Tagged With: The United States is the nation with the largest generator of wind energy, and it operates the two largest solar fields in the world. Historical Overview FPL Group is a far different company today than the one Jim Broadhead joined in January of when he became president and chief executive officer.

FPL Group was then engaged in a number of businesses unrelated to its core electric skills, including insurance and financial services, real estate, cable television, and agriculture. Today, FPL Group is nationally known as a high quality, efficient, and customer-driven organization focused on energy-related products and services.

During and the more than 30 businesses was But in Aker Kvaerner still had a huge liquidity problem, so the company kept selling asset The transformation of FPL Group from a traditional, old-fashioned utility to a proven winner in both regulated and deregulated markets began soon after Mr.

Based on his experience in the natural resources and telephone industries — and taking into account the mood of the nation regarding competition — Mr. Broadhead thought it likely that the electric business would follow other industries previously deregulated.

Broadhead asked employees to focus on four areas: In FPL underwent a top-to-bottom restructuring and re-staffing. The entire organization was streamlined, layers of management were reduced, and bureaucratic procedures eliminated.

In latepassage of the National Energy Policy Act signaled additional changes in the industry, prompting a cost reduction program to be initiated in Broadhead joined the company, received its best NRC rating ever.

Dividend policy at fpl group inc case analysis

In — in a bold and unprecedented move that took the entire electric utility industry by surprise — Mr. Many companies and groups went bankrupt.

Problem Statement In reviewing the company's position in its industry, no immediate problems present themselves. By that time the actions taken by Mr. Broadhead were producing a multitude of benefits for the company, including improved credit ratings, positive cash flow for the first time in years, and rising stock value.

During the remainder of the 90s and into the 21st century, FPL continued to achieve significant improvements in service, reliability, and plant performance while operating and maintenance costs continued to be driven down.

Outside of Florida the company was beginning to take advantage of new growth opportunities through FPL Energy, which rapidly established its presence in the independent power business as a leader in the use of environmentally friendly fuels and renewable energy sources.

Customers, meanwhile, were rewarded with the lowest electric rates since These companies have recruited at graduate-level and as an employee you have often experienced an annual wage increase, more It has made Florida an even more attractive place to live and work.

Firms pay dividends to reward their shareholders for investing in the company. The dividends induce the shareholders to continue investing in the company rather than investing elsewhere in the market.

The disadvantage of paying dividends is that the firm has less money to reinvest. The firm might do better by postponing the payment of a dividend in order to reinvest earnings and take advantage of growth opportunities.

A further disadvantage of paying cash dividends is that they are not tax deductible. The two reasons that led FPL to cut its dividend were: This steady dividend policy increases every time the firm produces. How do you think After these issues were taken into account, there were four major factors that led FPL to simultaneously cut the dividend level and announce a stock repurchase program.

First, FPL believed that the negative signal from lowering the dividend would be somewhat offset by the positive signal from a stock repurchase program. Second, there was a tax benefit to a stock repurchase because dividend income is taxed more heavily than capital gains income. Fourth, switching to more repurchases and fewer dividends would strengthen the flexibility in the level of cash reserves 2.

There are two theories about dividends that are worth explaining in more detail in this paper. Those theories are the Signaling Hypothesis and the Clientele Effect.

Since future dividends are paid out of future profits, and given that managers are reluctant to cut dividends, any change in dividends to be paid is often viewed as a signal of future profits.

Thus, increases in dividends generally result in stock price increases and cuts in dividends generally result in stock price declines 3.Andrew Hallam. I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas.

In , Merrill Lynch published a report that disclosed the change in their investment rating for the FPL Group, Inc.. They had downgraded this rating as they expected the directors would choose not to raise the annual dividend.

3 Comparative Analysis: v Currently, FPL Group, Inc. offers a high dividend coupled with a high potential for capital gains. Market realization is expected to come as FPL increases capacity. FPL Dividend Policy-1 - Download as Word Doc .doc), PDF File .pdf), Text File .txt) or read online.

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