Analysing dividend policy Investors may attempt to infer a company’s dividend policy by observing its profits, dividends and payout ratio over time. Prepare the following information for both company (1). Westpac Banking Corp (2). Qantas Airways

A) For each company, list out the past 12 years (FY2006 to 2017)

- Net profit after tax

- Earnings per share

- Dividend per share

- Dividend payout ratio

B) Based on the dividend payout ratio data for the period 2006 to 2017, how would you describe each of the company’s dividend policy?

C) Compare the dividend payout ratio of both companies over this period. What might you infer from the differences in their dividend payout policy and the industry that they are in? Give reasons.

D) Note any major changes in each company’s dividend policy over this period and the reasons given by the companies for such changes. Do you agree with the company’s decision to change their dividend policy? Give reasons. E) Examine the daily share price movement of each company in the 4-week period before and after its most recent change in dividend policy. Plot a chart of the price movements for each company during this period. What conclusions can you draw from the movements of their share price?