A corporation announces a significant increase in its annual dividend and its stock price increases on the news.This could be explained most directly by

Question

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The increase in the annual dividend signals to investors that the company is generating more profits and is confident in its future growth potential. This increase in dividends provides a tangible benefit to shareholders, known as the "bird-in-the-hand," which can lead to increased demand for the stock, resulting in a price increase.

A Corporation Announces a Significant Increase in Its Annual Dividend