The rate of dividend growth can be estimated by multiplying the return on equity rate by the dividend payout ratio.

Question

Quizplus · Accepted Answer

The rate of dividend growth is typically estimated using the retention ratio (the proportion of earnings not paid out as dividends) multiplied by the return on equity (ROE), not the dividend payout ratio. The dividend payout ratio is the proportion of earnings paid out as dividends to shareholders.

The Rate of Dividend Growth Can Be Estimated by Multiplying