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clientele effect



The clientele effect is the attraction of companies with specific dividend policies to those investors whose needs are best served by those policies. Thus, companies with high dividends will have a clientele of investors with low marginal tax rates and strong desires for current income. Conversely, companies with low dividends will have a clientel of investors with high marginal tax rates and little need for current income.


The clientele effect of General Electric stock generally favors investors who prefer dividends.

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