Company E has a dividend yield of 0.06% and a cost of equity capital of 0.1%. Lu

Question

Company E has a dividend yield of 0.06% and a cost of equity capital of 0.1%. Luther Industries' dividends are expected to grow at a constant rate indefinitely. What is the growth rate of the dividends of Company E's stock? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer. Company E has a dividend yield of 0.06% and a cost of equity capital of 0.1%. Luther Industries' dividends are expected to grow at a constant rate indefinitely. What is the growth rate of the dividends of Company E's stock? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer.

Explanation / Answer

Dividend yield = D1 / current price

Cost of equity = ( D1 / current price ) + growth

0.001 = 0.0006 + g

0.0004 = g

growth rate is 0.0004

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