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How do you determine what the expected dividend is for a year?

Stock Values. Integrated Potato Chips paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year.
a. What is the expected dividend in each of the next 3 years?

Year
0 $1
1 $1.04
2. $1.08
3. $1.125

At 4 percent growth there is not enough compounding to allow more than 4 cents a year increase. By year 5 the dividend should be $1.21.

This entry was posted on Monday, October 12th, 2009 at 4:38 pm and is filed under dividend. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “How do you determine what the expected dividend is for a year?”

  1. Serge M says:
    October 12, 2009 at 9:48 pm

    Year
    0 $1
    1 $1.04
    2. $1.08
    3. $1.125

    At 4 percent growth there is not enough compounding to allow more than 4 cents a year increase. By year 5 the dividend should be $1.21.
    References :

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