In order to really build that future
dividend growth expectation, though, we must look at what kind of underlying business growth the company is generating.
Not exact matches
With a long history of profit
growth, overly pessimistic
expectations baked into the stock, and a 6 % (
dividend plus share buybacks) yield, this week's Long Idea is Eaton Corporation (ETN).
Why business reality —
dividend yields and earnings
growth — is more important than market
expectations
And in order to get a feel for what kind of future
dividend growth to expect, we must first build an
expectation of underlying business
growth.
And so we need to build those future
expectations in terms of business and
dividend growth, which will also help us later value the business.
If management can't then our
expectations for future
dividend growth are too optimistic.
- Seven Year Revenue
Growth Rate: 5.8 % - Seven Year EPS
Growth Rate: 9.4 % - Seven Year
Dividend Growth Rate: 14.9 % - Current
Dividend Yield: 2.43 % - Balance Sheet: Reasonable Leverage, Stable Currently, Walmart's $ 77 share price appears to be fairly valued for an
expectation of 10 % long - term returns.
I prefer that the sum of the current
dividend yield plus my
expectation for
dividend growth over the long term to be greater than or equal to 8 %.
With current
dividends yields historically low,
expectations for slower earnings
growth ahead, and lofty multiples, Arnott doubts a continuation of the past equity premium.
Above - average current yield and
expectations for above - average earnings
growth out to fiscal year - end 2018 makes slow - growing high - yielding SCANA an intriguing
dividend growth stock opportunity.
Such policies are fine, but
dividend growth in these cases has little to say about management
expectations.
We are living in a slow
growth world, however, and the rather modest
expectations for
dividend growth reflect that.
I think a 6 % to 8 %
dividend growth rate going forward is a realistic
expectation.
The company has a 3 % +
dividend yield, solid 7 % to 9 % constant currency earnings - per - share
growth expectations, and a strong competitive advantage.
When this method is applied on a share - by - share basis of a
dividend stock, then it's called either the Dividend Discount Model or Method (generally), or the Gordon Growth Model (under expectations of a perpetual static growt
dividend stock, then it's called either the
Dividend Discount Model or Method (generally), or the Gordon Growth Model (under expectations of a perpetual static growt
Dividend Discount Model or Method (generally), or the Gordon
Growth Model (under expectations of a perpetual static growth
Growth Model (under
expectations of a perpetual static
growth growth rate).
Our top 10 best
dividend paying whole life insurance companies have a solid track record for paying
dividends, as we believe that this is key to providing a reliable
expectation for guaranteed and potential high cash value
growth.