one school is investor prefer dividend. the argument is that a company that pays dividends will have a lower cost of equity capital. why is that?
Bird in the hand beats two in the bush. If earngings are distributed (rather than “accrued”) investors will require a lower ROR as a result of the cash flow. It really isn’t all that different than accruals ratio in FRA, earnings on paper (in the bush) are nice, cash flow in the hand is preferred.