Case ID: 295059
Solution ID: 4935
Words: 2277
Price $ 75

Dividend Policy at FPL Group Inc A Case Solution

Case Solution

A wall street evaluator has just found out that FPL (the holding firm for the biggest electric functionality in Florida) may see a decline in its dividends in many days even though it has had a trend of dividend increase for the past 47 years. FPL has significantly updated and changed its competitive strategy throughout the past as a result of the autonomy that was given to the electric utility industry. The evaluator must determine if the alteration in the dividend program will amount to being a function of FPL’s financial plan and tactics in an industry that is faced with deregulatory circumstances.

Excel Calculations

Calculation of Cash Flow Avaiable to Equity Holders (1994-1998)

Analysis of Different Dividend Policies

Scenario 1: No Dividend Cut & Dividend Grows at 2%

Dividend Growth Rate,Currect Dividend,Forecast Dividend Per Share,,Total Forecast Dividend,Payout Ratio,Dividend to FCFE Ratio,Additional Financing Needed

Scenario 2: No Dividend Cut & No Dividend Growth

Forecast Dividend Per Share,,Total Forecast Dividend,Payout Ratio,Dividend to FCFE Ratio,Additional Financing Needed

Scenario 3: 20% Dividend Cut & Dividend Grows at 5%:

Dividend Growth Rate,Currect Dividend,Forecast Dividend Per Share,,Total Forecast Dividend,Payout Ratio,Dividend to FCFE Ratio,Additional Financing Needed

Questions Covered

Executive Summary

Introduction

Industry Environment and Dividend Preferences

Analysis of Dividend Policy

Scenario 1: Continued Dividend Growth

Scenario 2: Stable Dividends

Scenario 3: Dividend Cut

Predicting the Price Changes

Recommendation