What is the key premise of the dividend growth method of share valuation?
A) The growth in dividends will equal the rate of inflation.
B) There will be constant growth in future dividends to infinity.
C) There will be constant growth in future dividends to the planning horizon.
D) The growth in dividends will equal the rate of increase of the share price.

Question

Quizplus · Accepted Answer

The dividend growth model assumes that dividends will grow at a constant rate indefinitely, allowing for the valuation of a share based on the present value of these future dividends.

What Is the Key Premise of the Dividend Growth Method