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Dow dividend theory |
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Dow dividend theorySee: Dogs of the Dow.Dow dividend theory Similar MatchesDividendDividendThe amount paid each quarter by a corporation to its stockholders for each share of stock. Dividend payout ratioDividend payout ratioPercentage of earnings paid out as dividends. Ex dividendEx dividendThis literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared dividend. It is the interval between the record date and the payment date during which the stock trades without its dividend-the buyer of a stock selling ex-dividend does not receive the recently declared dividend. Antithesis of cum dividend (with dividend). Expected dividend yieldExpected dividend yieldTotal amount of dividends received during the life of a futures contract or total dividends received for holding a particular stock one year. See: Current yield. Dividend discount modelDividend discount modelA way of valuing a share based on the net present value of the dividends that you expect to receive in the future.The simplest version of the model assumes that the company's dividend rate remains constant. The 'fair' price of the share is the dividend (in pennies per share) divided by the required rate of return. So if you want 10% a year from your shares, the value of a company paying a 7p dividend is 70p. If you think a return of 8% is satisfactory, the value of the same share is 87.5p.A more complex model assumes that the dividends of the company grow at a consistent rate. The fair price to pay is the next dividend divided by the required rate of return minus the rate at which dividends are expected to grow. So if the 7p dividend is expected to grow at 5% per year, an investor requiring an 12% return would value the shares at (7p x 1.05) divided by (0.12 - 0.05)= (7.35p) divided by (0.07)= 105p Further SuggestionsdividendTax differential view (of dividend policy) year end dividend dividend growth Dividend distribution Participating dividend cum dividend Dividends received deduction Residual dividend approach dividend reinvestment plan Dividend rollover plan Stock dividend Dividend Discount Return Dividend Order Dividend clientele interim dividend With dividend Special dividend Cum dividend ex dividend Ex stock dividends Liquidating dividend Interim dividend Dividend clawback Year end dividend |
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