What operational dividend model proposes that dividend payouts should equal remaining cash earnings only after all positive Net Present Value projects are fully funded?

Explanation

• The Residual Dividend Policy dictates that capital investment in positive NPV projects takes total priority over dividend distributions.
• Under this policy, dividends are paid strictly from residual earnings left over after funding internal capital budget demands.
• This approach minimizes total equity floatation costs but can lead to volatile, fluctuating dividend payments.