Question
A company with a high dividend payout ratio is a better investment than a company with a low dividend payout ratio. Do you agree? Explain.
"A company with a high dividend payout ratio is a better investment than a company with a low dividend payout ratio." Do you agree? Explain.
A.
Yes. An investor who has a short-term investment horizon and who likes current cash flow may prefer a stock with a high dividend payout ratio. A high ratio signals that the company is paying dividends because it has investment or growth opportunities.
B.
No. An investor who has a long-term investment horizon and who isn't concerned with current cash flow may prefer a stock with a high dividend payout ratio. However, a high ratio may signal that the company is paying dividends because it does not have investment or growth opportunities.
C.
No. An investor who has a short-term investment horizon and who likes current cash flow may prefer a stock with a high dividend payout ratio. However, a high ratio may signal that the company is paying dividends because it does not have investment or growth opportunities.
D.
Yes. An investor who has a long-term investment horizon and who isn't concerned with current cash flow may prefer a stock with a high dividend payout ratio. A high ratio signals that the company is paying dividends because it has investment or growth opportunities.
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