The growth rate of dividends will depend on the growth in earnings and the percentage of earnings paid out as dividends, as opposed to being retained by the company. Many analysts assume that the payout ratios are relatively stable in which case the growth rate of dividends equals the growth rate of earnings. The growth rate is determined by the amount of earnings retained and the return on equity that it can generate on these earnings.
g = earnings retention rate x return on equity
Corporate Finance Homework Help | Finance Assignment Help | Finance course help | Finance Homework Help | Finance Online Help | Finance Problems Help | Finance Tutor | Help With Finance Homework | Online Tutoring