Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders in the form of dividends. It is a key component of a company's overall financial strategy and can have a significant impact on the value of its stock. Dividend policy is typically determined by the company's board of directors and is based on a variety of factors, including the company's financial performance, its cash flow, its growth prospects, and the current economic environment.