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clientele effect

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Definition:

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.

Examples:

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

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