This week's readings introduce a method of valuing a company's stock called the Dividend Growth model, which bases a company's valuation on several factors, starting with a company's expected dividend payout and growth rate. Based on this model, why might a company be hesitant to reduce its dividend growth rate?
Certain industries, such as utilities, are known for generally high dividend payout ratios, whereas other industries exhibit generally low or no dividend payout ratios. Why might that be? What does a company's dividend policy say about management's view of the company?