The term dividend clientele refers to shareholders that have a common preference for the dividend policy of a company. Dividend clientele will oftentimes pressure companies into dividend policies that are aligned with their investment objective.
The dividend clientele of a company are holders of common stock that share a similar viewpoint on the company's dividend policy. This viewpoint will normally be self-serving, and be directly aligned with the shareholder's investment objective. For example, shareholders that depend on a generous dividend yield will pressure the company to continually maintain, or increase, the company's quarterly dividend.
The pressure a company's dividend clientele can place on their decision-making process is not trivial. In fact, a change in policy that is not aligned with the views of a company's clientele can precipitate what is referred to as the clientele effect. The clientele effect is an investment theory that hypothesizes the investors in a security will have a direct impact on the price of the security when a change in policy affects their investment objective. These individuals will buy or sell the security if a change in policy takes place that is aligned, or no longer aligns, with the individual's investment objective.