Question

Companies with higher growth potential are likely to ______________.

• A. pay lower dividends
• B. Pay higher dividends
• C. Dividends are not affected by growth consideration
• D. None of the above

Answer 1

The correct option is A pay lower dividends

Generally a company with higher growth paternal are likely to pay lower dividends. This is because the companies wants to invest that money in earning higher income and growing at a higher rate which is in the benefit for the long term rather than paying dividend which will only benefit the company for a short term.