genuinecfa

I was upset over the very same question! But I think the key word here is "growth" - dividend GROWTH increases -- think "g"

g increases, free cash flows increase, values increase.... etc.

If just dividend PAYOUT ratios increased, with no accompanying earnings growth, then you arrive at completely the opposite answer, as we both did.

I don't know whether it's fair to be upset with Schweser, or to thank them. This is exactly the kind of BS you can expect from the CFAI this Saturday.