We use a simple two-stage dividend growth model to connect profitability growth and firm scale to stock returns. In this framework, both the magnitude and the length of the first-stage growth play a key role in determining returns. Using current profitability growth to estimate magnitude and firm scale as inverse proxy for length, we predict that future returns should increase with current profitability growth but, crucially, the effect should diminish with firm scale. Across a range of empirical tests, we find strong evidence in support of our model determinants and predictions. Our findings are not explained by an array of associated, potentially confounding variables.

我们使用简单的两阶段股息增长模型将盈利能力增长和公司规模与股票回报联系起来。在此框架中，第一阶段增长的幅度和持续时间在决定回报方面发挥着关键作用。使用当前盈利增长来估计规模和公司规模作为长度的反代理，我们预测未来回报应该随着当前盈利增长而增加，但最重要的是，这种影响应该随着公司规模而减弱。通过一系列的实证测试，我们发现了强有力的证据来支持我们的模型决定因素和预测。我们的发现并不能用一系列相关的、可能令人困惑的变量来解释。