Final answer:
High growth stocks typically pay c. low or no dividends. This is due to the company's decision to reinvest earnings to facilitate further growth. Historical S&P 500 data supports the trend of decreasing dividends for growth-oriented firms.
Step-by-step explanation:
Generally, high growth stocks pay c. low or no dividends. This is because companies that are expanding quickly are likely to reinvest any earnings back into the business to fuel further growth, rather than distributing it to shareholders as dividends. Historical data from the S&P 500 shows that from the 1950s to the 1980s, firms paid annual dividends of about 4% of stock value. However, since the 1990s, dividends have declined and now often yield a return of just 1% to 2%. This trend suggests that, especially in recent decades, capital gains have been emphasized over dividends when it comes to high-growth companies. In periods of significant stock price appreciation, such as in the 1980s and 1990s, dividends played an even smaller role, emphasizing the point that companies focused on growth tend not to offer high dividends.