Given constant earnings per share, an increase in dividends will generally:

A) Increase the dividend yield as well as the capital gains yield.
B) Decrease the growth rate of the corporation and increase the current yield.
C) Increase the dividend yield and decrease the current yield.
D) Have no effect on either the capital gains yield or the total return.
E) Have no effect on either the total return or the current yield.

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Alexis Jennings · Accepted Answer

Final Answer : B, Explanation :  An increase in dividends, assuming constant earnings per share, typically means that a larger portion of the company's earnings is being paid out to shareholders rather than being reinvested in the company. This can lead to a decrease in the growth rate of the corporation since less money is being reinvested for future growth. It also increases the current yield (dividend yield) because the dividend payout is higher relative to the stock price.

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