Do higher dividends lead to higher earnings growth?

Recent research has discovered that the market payout ratio is a good forecaster of future growth in market earnings. This runs counter to the thought that higher growth in earnings will naturally follow from higher, and astute, re-investment of earnings. This paper adds support to the extant research on this topic by testing for and finding a relationship between the payout ratio and future real growth in earnings for the TSX Composite. The strength of this relationship is robust to various tests; however, this paper also finds periods of time where the relationship does not hold.