Dividend from Financial Statements Cash Stockholder's Dividend Stock Price Year Equity (in millions) Div/share (S) Yield 3.00% S 2.70% S 2.60% S 2015 2.92 2,491.00 429.00 1,030.00 97.33 2016 3.12 115.56 127.69 2017 3.32 1. Stock Valuation The new dividend yield if the company increased its dividend per share by 1.75 Cash Stockholder's Dividend Div/Share (S) Year Stock Price Yield Equity (in millions) +1.75 4.80% S 4.21% S 3.97% S 2,491.00 429.00 S 1,030.00 S 2015 4.67 97.33 2016 4.87 115.56 2017 5.07 127.69 2. The dividend yield if the firm doubled it's outstanding shares Stockholder's Cash Dividend Equity (in millions) Stock Price Year Div/Share (S) Yield doubled 1.50% $ 1.35% S 1.30% S S 4,982.00 858.00 S 2015 1.46 97.33 2016 1.56 115.56 2,060.00 S 127.69 2017 1.66 3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above Cash Return on Div/Share Year Stock Price Investment ()+1.75 4.67 4.87 5.07 $ CALCULATE ROI 2015 97.33 23.72% [(Dividends + $1.75) (new price - old price)] /(old price) 14.89% [(Dividends+ $1.75)(new price - old price)] (old price) 2016 2017 115.56 $ 127.69
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
To what extent does the company’s dividend policies support or hinder their strategies? For example, if the company is attempting to grow, are they retaining and reinvesting their earnings rather than distributing them to investors through dividends? Be sure to substantiate claims.
![2. The dividend yield if the firm doubled it's outstanding shares
Stockholder's
Cash
Dividend
Equity (in millions) Stock Price
Year
Div/Share (S)
Yield
doubled
1.50% $
1.35% S
1.30% S
S
4,982.00
858.00 S
2015
1.46
97.33
2016
1.56
115.56
2,060.00 S
127.69
2017
1.66
3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above
Cash
Return on
Div/Share
Year
Stock Price
Investment
()+1.75
4.67
4.87
5.07
$
CALCULATE ROI
2015
97.33
23.72% [(Dividends + $1.75) (new price - old price)] /(old price)
14.89% [(Dividends+ $1.75)(new price - old price)] (old price)
2016
2017
115.56
$
127.69](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5b2b52b1-0127-4000-bb49-59ba3fafc4c8%2Fd7a41653-19b2-4990-bd41-d14eced2cd5c%2Fji2z72k.png&w=3840&q=75)
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