Dividend Growth's Drivers: Picking Apart Quality
Using the DuPont model to examine ROE and future dividend growth potential.
A key to getting the firepower under dividend growth—future dividend growth, not past growth—is a high return on equity (ROE). But thinking about ROE involves so much more than just looking at a number. How do companies generate high or low ROE? We can pick up those dynamics with the DuPont model. Using this method, we can calculate implied, or future dividend growth.