Lintner's Model

Definition

A model that states that there are two parameters to a company's dividend policy. These parameters are the target payout ratio and the speed where current dividends adjust to that target. The theory was adopted based on observations that many companies will set their long-run target dividends-to-earnings ratios based upon the amount of positive net-present-value projects that they have available.

Use Lintner's Model in a sentence

You may want to try and use Lintner's Model to figure out new ways for your company to improve in the future.

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I liked Lintner's model and thought it was a good way to enforce the policy and get things going in a more positive direction.

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The Lintner's Model was useful in assessing the structure of our dividend payment policy to ensure investors were optimally compensated.

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