High power amplifiers (HPA), used at transmission, add nonlinear impairments to the output signals. Through Constant envelope (CE) transmission, distortion in the signal can be avoided without wasting power on PA linearization. A more restricted form of CE transmission, 1-bit quantized transmission, further simplifies the RF chain and reduces the DAC power consumption. In this paper, for CE transmission and 1-bit quantized transmission at the BS antennas, we analyze downlink transmission for low complexity linear precoding. We observe that for small numbers of users in the downlink, correlation among the quantization error components across BS antennas is high, deteriorating the performance rapidly as number of users become smaller. To improve performance for smaller numbers of downlink users, we propose the addition of correlated Gaussian dither to the precoded signal before quantization and subsequent transmission. We observe that the receive SQINR peaks for finite non-trivial dither power. For given value of transmit power, number of BS antennas and number of users, SQINR is maximized analytically by the transmitter, to find the optimum dither power, using the Bussgang decomposition. We observe that with the implementation of optimized dithering, the error floor in the coded BER at high transmit power, for CE and 1-bit quantized transmissions, is pushed down significantly. We also observe that optimum dither power increases monotonically with transmit power, with rate of increase decreasing with increasing transmit power. Further, the optimum dither power strictly increases with number of BS antennas.