Empirically the studies have shown that declaration of dividend is considered to be a positive signal as it reflects a feeling that the future earnings, based upon which the company is valued, are higher and that's why the company has declared a dividend and vice versa but this is not true for all sort of investors. When in 2003 Microsoft was deciding to declare dividend several investors were curious as investors, seeking growth, had invested with the aim that the company would grow but it could give a perception that the company had no future projects to hold cash.
As an analyst it is necessary to know about the capital structure of the company. The reinvestment opportunities, growth opportunities available to the company, the client preference and the legal and financial environment. Based upon these aspects the dividend policy of the company must be evaluated.