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In this video, Kirby A. Cundiff, a PhD and financial expert from the University of Maryland, discusses three primary theories regarding how companies should set their dividends to maximize stock prices. The first is the dividend irrelevance theory, which posits that dividend policy does not impact stock price. The second is the bird-in-the-hand theory, suggesting that investors prefer companies that pay higher dividends as they value receiving cash. The third is the tax preference theory, where investors may avoid dividends due to higher tax rates compared to capital gains. Cundiff explores the implications of stock price as it relates to these payout theories.