## Dividend Growth Rate:

The dividend growth rate determines the expected capital gains yield of a stock. This is because the price of a stock, all else the same, is expected to increase at a rate that is equal to the growth rate of dividends.

We can use the dividend growth model to compute the growth rate of dividend as follows:

• dividend growth rate = required return - next dividend / current price
• dividend growth rate = 11.5% - 1.5 / 34
• dividend growth rate = 7.09%