If Red Bison Petroleum Producers Group reduces the amount of its forecasted capital budget, how will this affect the firm’s annual dividend, assuming that all other factors are held constant? The amount that Red Bison Petroleum Producers Group will pay out in dividends this year will increase. The amount that Red Bison Petroleum Producers Group will pay out in dividends this year will decrease. Most firms have earnings that vary considerably from year to year and do not grow at a reliably constant pace. Furthermore, their required investment may change often. Which of these statements is the most accurate? A residual dividend policy can’t be of any help to most firms. Most firms can still use the concepts behind a residual dividend policy to make long-run decisions about dividends.