This thesis studies the relationship between the dividend payout ratio and company profitability growth in term of compound earnings growth rate within the next one to three years. Based on the assumption, this study emphasises that company announcements of a change in dividend payouts act as an indicator of the firm possessing strong future prospects in the positive relationship and focuses on the company listed in the Stock Exchange of Thailand during the years 1980 to 2011 consisting of 1,559 Firm-Years. Controlling for other variable known to affect earning growth, such as Return on Asset, Leverage Ratio, Firm Size, Earning Yield, Past Earning Growth and Asset Growth, the empirical result derived from various tool analysis (Correlation method, Simple regression, Multiple regression and Cross sectional regression) concludes that there is a significant positive relationship between dividend payout and future earnings growth of the firm for the next one to three years. In addition, the robustness test shows that the positive relationship between dividend payout ratio and earnings growth hold across from size groups.
