Dividend Growth Rate Over the Last Four Years Management Discussion

Calculate the dividend growth rate over the last four years.

Dividend four years ago = $1.65 per share
Dividend yesterday = $2.10 per share

Dividend growth rate = (Dividend yesterday – Dividend four years ago) / Dividend four years ago
Dividend growth rate = ($2.10 – $1.65) / $1.65
Dividend growth rate = $0.45 / $1.65
Dividend growth rate ≈ 0.2727 or 27.27%
27.27%/4= 6.8175

Calculate the dividend for the next five years using the same growth rate.
Next year’s dividend = $2.10 + ($2.10 * 0.068175) ≈ $2.24 per share
Year after next = $2.24 + ($2.24 * 0.068175) ≈ $2.39 per share
Third year = $2.39 + ($3.39 * 0.068175) ≈ $2.55 per share
Fourth year = $2.55 + ($2.55 * 0.068175) ≈ $2.72 per share
Fifth year = $2.72 + ($2.72 *0.068175) ≈ $2.91 per share

Calculate the dividend in the seventh year 5% growth rate)
Sixth year = $2.91 + ($2.91 * 0.05) ≈ $3.1 per share
Seventh year = $3.1 + ($3.1 * 0.05) ≈ $3.3 per share

1. The company’s dividend in seven years is approximately $3.3 per share.
2. The two components of the total return on a share of stock based on the dividend growth model are dividend yield and dividend growth rate. The larger component depends on the specific company and market conditions. Generally, mature companies have a higher dividend yield, while growth companies have a higher dividend growth rate.

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.