Because investors like dividends,the higher the company's dividend growth rate,the lower the company's cost of common equity.

Question

Quizplus · Accepted Answer

A higher dividend growth rate can actually increase a company's cost of common equity because investors may require a higher return to compensate for the risk associated with the expectation of higher future dividends. Additionally, higher dividend payouts can limit the funds available for reinvestment in the company, potentially affecting future growth opportunities.

Because Investors Like Dividends,the Higher the Company's Dividend Growth Rate,the