How is a sustainable dividend growth rate defined?
A)a constant rate at which dividends increase
B)a rate of growth that does not exceed two percent of the annual increase in revenue
C)a rate of growth that is set equal to one-half of the average growth rate of a firm's earnings
D)a rate that can be supported over time by a company's earnings
E)a rate of dividend growth that is equal to the discount rate used to value the firm's stock

Question

Quizplus · Accepted Answer

A sustainable dividend growth rate is defined as the rate of dividend growth that can be supported over time by a company's earnings. It is important for companies to maintain a sustainable dividend growth rate to avoid financial instability and maintain investor confidence. Choosing this answer means that the other options are incorrect.

How Is a Sustainable Dividend Growth Rate Defined