Over the past year, investors have been fleeing to the "safety" of dividend stocks. Yet overpaying for yield, can quickly turn your "safe haven" into a trap. Correct valuation is the key to dividend investing success. Unfortunately, when it comes to valuing stocks, opinions are in greater supply than answers. I want to help us get closer to answers. Here is a tool that can help us determine a tangible price for dividend stocks.
The dividend discount model, is one time tested tool for dividend valuation. It only values the worth of an asset relative to its income, so for income investing, it's about as tangible as it gets. You'll need to make a few estimates for this model to work. Calculate what your required return on investments is, and what the anticipated dividend growth rate of the stock in question will be. Then you simply divide this years expected dividends, by the required return minus the expected dividend growth rate.
Source: Motley Fool
Related Articles:
- International Diversification May Be Closer than You Think
- 10 Dividend Stocks With A 10% Yield In 10 Years
- Free Cash Flow Payout vs. Dividend Payout
- 9 Dividend Stocks Trading at a Double-Digit Discount
- 6 High-Dividend, Low P/E Value Stocks
________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
These stocks are a safe bet to increase your portfolio value as they provide both steady income and cushion against market risks. A large pa...
-
In bull markets, dividends become more or less irrelevant. When the Dow Jones Industrial Average traded above 14,000 in 2007, very few stoc...
-
I love getting paid to invest, which is why I've filled my portfolio with income stocks. My favorites are those that not only pay genero...
-
This is one of our top dividend-paying companies that can help boost the investment income in your portfolio. These stocks are a safe way to...
-
Tracking down a stock that pays a high yield is easy enough to find, but selecting ones that are worth holding onto for decades to come is q...
-
A big worry for retirees isn't necessarily the size of their nest eggs, but whether they'll keep up with inflation. While convention...
-
Not all dividend-paying companies make a lot of money, but the ones that do could fetch you solid returns in the long run, simply because a ...
-
In some dividend investors' minds, there's no such thing as too much dividend income. Yet often, stocks that carry extremely high di...
-
There are some dividend aristocrats which have not only maintained but increased their dividends for over half a century. Having survived ev...
-
With so many concerns plaguing investors’ minds, dividend paying stocks are tempting options at the moment. The best dividend stocks pay out...
0 comments
Post a Comment
Post a Comment