Hi sir, i just wanna check if my understanding is correct on the limitations of dividend growth model .
The model assumes that shareholders value firms based on
-the amount of future dividends that a company pays &
- the rate of growth of dividends right ?
Therefore, the value of the firm can become questionable if the company either stops paying or reduces its dividend payment right ?
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Limitations of Dividend growth model
9y ago#1The market value is based on shareholders expectations of future dividends. If anything happens to change their expectations (such as reducing the dividend) then the share price will change.
Okay thank you.
9y ago#3You are welcome :-)
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