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Feb 2021. Facebook is a publicly- listed, hi-tech social-media company that does not pay a...

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Finance

  1. Feb 2021. Facebook is a publicly- listed, hi-tech social-media company that does not pay a cash dividend. Facebook has a good growth record, and the stock has a $250 per share price.

Suppose, in January 2022, Facebook announces that it will begin to pay a $1.50 per share quarterly cash dividend (i.e., $6 per year) in March 2022. The prospective 3.4% yield is above-average for US stocks.

Management states that Facebook intends to increase the dividend on a regular basis.

Suggest three (3) possible reasons for why Facebook management changed the dividend policy.

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