250 words In the context of the dividend growth model is it

250 words

In the context of the dividend growth model, is it true that the growth rate in dividends and the growth rate in the price of the stock are identical?

Solution

It is true that the growth rate in dividends and the growth rate in the price of the stock are identical..

The dividend grows at a consistant rate same way the stock price grows at a consistant rate. as the formula is stock price Po = D(1+g) as the formula shows as the growth rate increases the price of the stock increase.