Market analysts expect the earnings per share of JLC Ltd to be $2.00 next year. The company has typically retained 60% of its earnings and this policy is expected to continue in the foreseeable future. Assume that investors require a return of 8% p.a. on this company and that its shares are currently trading at $40.00 per share. Based on this information, the implied annual growth rate of JLCs dividends is closest to:

2.0%.

3.0%.

5.0%.

6.0%.