Dividend payout and future earnings growth : a South African study
Thesis (MDF)--Stellenbosch University, 2011.
In the past it was believed that the payment of dividends would decrease the funds available to finance growth, and would therefore lead to lower future earnings growth. This belief was challenged in recent years with research that tested the relationship between dividend payout and future earnings growth, both on the individual company and aggregate market level in different countries. The results contradicted popular belief, and showed that companies with high payout ratios tend to realise stronger future earnings growth. This study tested the same relationship in South Africa and concluded that even in a developing country, dividend payout will still lead to higher future earnings growth.