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In general, how is a firm's growth rate in earnings per share affected by its dividend...

In general, how is a firm's growth rate in earnings per share affected by its dividend policy?

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The dividend policy impacts retained earnings of the company. Higher the dividend lower will be the retained earnings and vice versa. The retained earnings represent profits which are plowed back into the business. These are used for investing in various projects which is expected to increase the earnings per share. Hence the restrictive dividend policy will generally increase the earnings per share if investments are made wisely by the management.

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