In the model P/E = (D₁/ E₁) / (k

Question

In the model P/E = (D₁/ E₁) / (k - g), the P/E should increase if the dividend payout rate increases, other things being the same. If the payout rate was intentionally increased by the board of directors, other things are likely not to stay the same. What is likely to happen to the dividend growth rate and the required return?

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The Answer of In the model P/E = (D₁/ E₁) / (k - g), the P/E should increase if the dividend payout rate increases, other things being the same. If the payout rate was intentionally increased by the board of directors, other things are likely not to stay the same. What is likely to happen to the dividend growth rate and the required return?

In the Model P/E = (D1 / E1) / (K