Johnson & Johnson (JNJ) Dividend Growth JNJ’s dividends have grown an average of 7.365% over the...

Johnson & Johnson (JNJ) Dividend Growth

JNJ’s dividends have grown an average of 7.365% over the past 11 years. The rate of dividend growth is likely to slow over time, especially if another recession occurs. The last dividend paid was $3.54. Assume dividends will grow 7.0% in year 1 (now to December 2019), 6.5% in year 2, 6.0% in year 3, and 4.5% thereafter.

Require Rate of Return is 7.08%

Using the required rate of return that you calculated and the assumptions above, what is the expected price of Johnson & Johnson stock today?

Please show me how to do it step by step

Thank you

Solutions

Expert Solution

jeff jeffy answered 8 months ago

Next > < Previous

Related Solutions

Calculate the average annual growth in dividends over the last five years.

Table 1 is the dividends per share of the 5 companies in the past 5 years. Table2 shows monthly closing share prices (adjusted to include dividends) of 5 companies, and the adjusted closing prices for the ASX200 index. Calculate the average annual growth in dividends over the last five years. Use this information, along with Gordon’s Growth Model to estimate the implied expected return for each REIT at the current market price. Show your analysis process. FY16 FY17...

Ryan buys a stock in Johnson & Johnson (JNJ) for $50. After one year, the stock...

Ryan buys a stock in Johnson & Johnson (JNJ) for $50. After one year, the stock price is $68 and he receives a dividend of $3.50. What is his return for the period?

Suppose Proctor&Gamble (PG) and Johnson&Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose...

Suppose Proctor&Gamble (PG) and Johnson&Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose a high, medium or low level of advertising. Below is the profit matrix for the two firms under combinations of each of the three decisions. The first number in the bracket is the JNJ profit, the second number if the PG profit. PG High Medium Low High (1,1) (3, 2) (5, 3) JNJ Medium (2,3) (4, 4) (6, 5) Low (3,5) (5,6) (7,5) a)...

How do you calculate the expected dividend growth rate and future dividends?

ABC company. paid a dividend of $2 on its stock. The growth rate of dividends is...

ABC company. paid a dividend of $2 on its stock. The growth rate of dividends is expected to be a constant 4 percent per year, indefinitely. Investors require an 12 percent return on the stock for the first year, a 11percent return in the second year, a 10 percent return for the next four years and an 9 percent return thereafter. What is the current price for the stock?

China has grown by leaps and bounds over the past 40 years, however, that growth has...

China has grown by leaps and bounds over the past 40 years, however, that growth has come at a cost. Unbridaled industrial expansion resulted in massive levels of pollution in the rivers, ground, and air. The average air pollution level in China is roughly seven times the safe limit in the United States. In 2017, 1.2 million deaths were related to air pollution. It’s a place where going for a run might kill you sooner, as the exercise benefits are...

Australia incomes have historically grown over the past 100 years?

A stock just paid a dividend of $1, and is estimated to have a dividend growth...

A stock just paid a dividend of $1, and is estimated to have a dividend growth rate of 25% and 10% in the next two years. The stock is estimated to settle down to a 4% constant dividend growth thereafter. The required return of investors is 12%. (Round your answer to two digits after the decimal point.) show your work What is the dividend of year 1? What is the dividend of year 2? What is the dividend of year...

A fast growth share has the first dividend (t=1) of $2.33. Dividends are then expected to...

A fast growth share has the first dividend (t=1) of $2.33. Dividends are then expected to grow at a rate of 9 percent p.a. for a further 2 years. It then will settle to a constant-growth rate of 3.1 percent. If the required rate of return is 13%, what is the current price of the share? (to the nearest cent) a. $25.95 b. $45.88 c. $23.54 d. $45.62

A fast growth share has the first dividend (t=1) of $2.35. Dividends are then expected to...

A fast growth share has the first dividend (t=1) of $2.35. Dividends are then expected to grow at a rate of 8 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 3.0 percent. . If the required rate of return is 14 percent, what is the current price of the share? (to the nearest cent) Select one: a. $24.03 b. $53.84 c. $21.36 d. $26.44

Subjects