Highway Express has paid annual dividends of $1.32, $1.33, $1.38, $1.40, and $1.42 over the past five years, respectively. What is the average dividend growth rate?

Question

Quizplus · Accepted Answer

The average dividend growth rate can be calculated using the formula for the geometric mean of growth rates: $((\frac{D_n}{D_0})^{\frac{1}{n-1}} - 1) \times 100\%$, where $D_n$ is the final dividend, $D_0$ is the initial dividend, and $n$ is the number of periods. Plugging in the values: $((\frac{1.42}{1.32})^{\frac{1}{5-1}} - 1) \times 100\% \approx 1.85\%$.

Highway Express Has Paid Annual Dividends of $1