Why is the distribution of profits always a tricky decision?

Profits can be divided into two categories.

Distributed Profits-these profits are paid to shareholders or other owners, normally in the form of dividends.
Undistributed Profits-this portion of a business's profits are kept for investment in the business. Such profits maybe used to purchase new machinery/ properties.

They key issue in distributing profits is the balance between short term and long term. Distributing a high proportion of profits may keep shareholders happy in short term but might not be in the interests of those looking for a long term investment. Such shareholders want to see the company grow over a number of years and to benefit from rising share prices which in turn would increase the value of their investments.