Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the following per-share dividends

Common stock value: Constant growth

Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the following per-share dividends:

Year	Dividend per share
2019	$2.56
2018	2.26
2017	1.82
2016	1.19
2015	1.57

Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 22% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.56.

Solutions

Expert Solution

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

A stock paid a dividend of $1 per share in 2019. Dividend will increase by 3%...

A stock paid a dividend of $1 per share in 2019. Dividend will increase by 3% for the next two years and remain the same for the next three years. Thereafter, dividend will grow by 2% each year forever. Assume that the beta of the stock is 1.3, the equity risk premium is 5%, and the market return is 6.5%. Find the risk-free rate All things being equal, do you expect the stock to outperform the market? Why? Estimate equity...

(a) ABC Company has just paid a dividend of $1.00 per share. Dividends are paid annually....

(a) ABC Company has just paid a dividend of $1.00 per share. Dividends are paid annually. Analysts estimate that dividends per share will grow at a rate of 20% for the next 2 years, at 15% for the subsequent 3 years, and at 3% thereafter. If the shareholders’ required rate of return is 12% per year, then what is the price of the stock today? What will be the ex-dividend price at the end of the first year? What will...

Fowler, Inc., just paid a dividend of $2.55 per share on itsstock. The dividends are...

Fowler, Inc., just paid a dividend of $2.55 per share on its stock. The dividends are expected to grow at a constant rate of 3.9 percent per year, indefinitely. If investors require a return of 10.4 percent on this stock, what is the current price? What will the price be in three years? In 15 years?

Kafue Fisheries paid a dividend of K0.58 per share this year. Dividends at the end of...

Kafue Fisheries paid a dividend of K0.58 per share this year. Dividends at the end of each of the next five years are expected to be as follows: Year 1 K0.70 Year 2 K0.83 Year 3 K0.96 Year 4 K1.09 Year 5 K1.22 After year 5, dividends are expected to grow indefinitely at 10 percent a year. If your required rate of return for Kafue Fisheries’ common stock is 12 percent, what is the most that you would pay per...

Could I Industries just paid a dividend of $1.10 per share. The dividends are expected to...

Could I Industries just paid a dividend of $1.10 per share. The dividends are expected to grow at a rate of 19 percent for the next six years and then level off to a growth rate of 6 percent indefinitely. If the required return is 14 percent, what is the value of the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places. Price?

1. Membo just paid a dividend of $2.2 per share. Dividends are expected to grow at...

1. Membo just paid a dividend of $2.2 per share. Dividends are expected to grow at 7%, 6%, and 4% for the next three years respectively. After that the dividends are expected to grow at a constant rate of 3% indefinitely. Stockholders require a return of 8 percent to invest in Membo’s common stock. Compute the value of Membo’s common stock today.

Hank’s Barbecue just paid a dividend of $2.05 per share. The dividends are expected to grow...

Hank’s Barbecue just paid a dividend of $2.05 per share. The dividends are expected to grow at a 14.5 percent rate for the next five years and then level off to a 9.5 percent growth rate indefinitely. If the required return is 12.5 percent, what is the value of the stock today? What if the required return is 17.5 percent?

Heard, Inc., just paid a dividend of $8.4 per share on its stock. The dividends are...

Heard, Inc., just paid a dividend of $8.4 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, in- definitely. If investors require a 12 percent return on Heard stock, what is the current price? What will the price be in three years? In 15 years?

Fowler, Inc., just paid a dividend of $2.70 per share on its stock. The dividends are...

Fowler, Inc., just paid a dividend of $2.70 per share on its stock. The dividends are expected to grow at a constant rate of 4.5 percent per year, indefinitely. Assume investors require a return of 9 percent on this stock. a. What is the current price? b. What will the price be in six years and in thirteen years?

Membo just paid a dividend of $2.2 per share. Dividends are expected to grow at 7%,...

Membo just paid a dividend of $2.2 per share. Dividends are expected to grow at 7%, 6%, and 4% for the next three years respectively. After that the dividends are expected to grow at a constant rate of 3% indefinitely. Stockholders require a return of 8 percent to invest in Membo’s common stock. Compute the value of Membo’s common stock today.

Subjects