According to the 2009 Value Line Investment Survey, the growth rate in dividends for IBM for the

Question:

According to the 2009 Value Line Investment Survey, the growth rate in dividends for IBM for the next five years is expected to be 19.5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5 percent indefinitely. Assume investors require an 11 percent return on IBM stock. Is the stock priced correctly? What factors could affect your answer?

52-Week Price Hi Close Div Yld % 2.5 3.7 2.3 5.2 PE Net Stock (Div) Chg Ratio Price 10.43 33.42 ArchCoal 0.36 LacledeGrp

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...