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UNDERSTANDING VALUE
This section focuses on comprehending and recognizing value. Aside from posting videos on how to calculate value regarding various types of investments, I will also post articles and some of my own thoughts as to how to recognize value. Most people truly do not recognize value even when it is in
front of their face. This section will be a continuous work-in-progress. Understanding how to value stocks with Porter Stansberry (Click Here) |
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HOW TO CALCULATE INTRINSIC VALUE |
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UNDERSTANDING MARKET CAP |
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BOND VALUE: CALCULATE YIELD TO MATURITY |
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THE POWER OF COMPOUNDING |
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Question: How do you calculate the rate of dividend growth of a stock historically?
Answer: Historically, you just need to know the dividend at the start of the period you're measuring, the dividend at the end of the period and the length of the period. For example: in the first quarter of 2003, Coca-Cola's split-adjusted quarterly dividend payment was $0.11 a share. In the first quarter of 2013, it was $0.28. That's a period of exactly 10 years. Then just do this... ($0.28/$0.11)/10– 1 = 0.0979, or roughly a 9.8% annualized growth rate. Estimating future dividend growth isn't so easy. The best you can do is make a ballpark estimate of profit growth. If you think profits can grow about 5% a year for some period of time, there's no reason dividends shouldn't grow by at least that much. Share repurchases and a rising dividend payout ratio could cause it to grow even faster. |
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