Which statement is correct?
A)Tax rates are the key determinant to a company's dividend policy.
B)Firms are equally likely to increase or decrease their normal dividends per share.
C)Dividends tend to be more erratic than earnings.
D)Mature firms are less apt to pay dividends than young firms.
E)Dividend growth tends to lag earnings growth.

Question

Quizplus · Accepted Answer

Dividend growth tends to lag earnings growth because companies often wait to ensure that earnings growth is sustainable before increasing dividends.

Which Statement Is Correct