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How much does a dividend contribute to a stock price?

If the current stock price is $10.3; the contant growth rate is 3% per year and stock’s required return is 13%; and the Expected dividend in year 50 (D50) is 4.38, how much does that dividend contribute to the current stock price?

IBM Dividends 2000-9: http://www.ibm.com/investor/pdf/ibm_ir_dividends_2008_v2.pdf

A spreadsheet can help you estimate the answer to your question.

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.

3 Responses to “How much does a dividend contribute to a stock price?”

  1. Robert B says:
    October 12, 2009 at 9:43 pm

    The companies are reducing and taking away dividend amounts, so we cannot trust dividends to contribute much to a stock price nowadays.
    References :

  2. Space Invader101 says:
    October 12, 2009 at 10:18 pm

    IBM Dividends 2000-9: http://www.ibm.com/investor/pdf/ibm_ir_dividends_2008_v2.pdf

    A spreadsheet can help you estimate the answer to your question.
    References :

  3. dk says:
    October 12, 2009 at 10:35 pm

    people would hold the stocks if the dividend is attractive, contributing to less fluctuation of the stock prices, if the company is doing well
    References :

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