Dividend Discount Models Dynamic Chart

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Dividend Discount Models Dynamic Chart

  1. 1. DIVIDEND DISCOUNT MODELS Dynamic Chart Dynamic Chart of Two Stage Dividend Discount Model Inputs $400 Inflation Rate 3.0% 6 Instrinsic Value / Shr $300 Earnings Retention Rate 50.0% 5 $200 $100 $0 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% Real Discount Rate Outputs Real Discount Rate (Real k) 9.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% Intrinsic Value / Share $176 $176 $176 $176 $176 $176 $176 Nominal Discount Rate (k) 12.3% Stage 1: Explicit Forecast Historical Data Horizon (ROI > k) Period -2 -1 0 1 2 3 4 Inflation Rate 2.8% 3.1% 3.0% 3.0% 3.0% 3.0% Real Return on Investment (Real ROI) 22.3% 20.7% 19.0% 17.0% 15.0% 13.0% Nominal Return on Investment (ROI) 25.7% 24.4% 22.6% 20.5% 18.5% 16.4% Real Growth Rate in Dividend (Real g) 11.2% 10.4% 9.5% 8.5% 7.5% 6.5% Nominal Growth Rate in Dividend (g) 14.5% 13.7% 12.8% 11.8% 10.7% 9.7% Nominal Dividend / Share $5.10 $5.84 $6.64 $7.49 $8.37 $9.27 $10.17 Continuation Value / Share Sum of Future Div. & Cont. Value/Shr $7.49 $8.37 $9.27 $10.17 PV of Future Div. & Cont. Value / Shr $6.67 $6.64 $6.55 $6.40 Intrinsic Value / Share $176.26
  2. 2. o Stage Dividend Discount Model 9.0% 10.0% 11.0% 12.0% eal Discount Rate Stage 2: Infinite licit Forecast Horizon (ROI > k) (ROI = k) 5 6 3.0% 3.0% 11.0% 9.0% 14.3% 12.3% 5.5% 4.5% 8.7% 7.6% $11.05 $11.89 $256.51 $267.56 $150.00

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