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What payments will you receive if you buy the stock and plan to hold it for three years at 1 per share dividend yesterday and expect the dividend to grow steadily at a rate of 4 percent per year?

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2006-08-06 02:11:12
2006-08-06 02:11:12

I assume you mean 1% dividend. For the first year, each quarter you will receive one quarter of one percent, or 0.25%. The second year, well, that depends on what you mean. Do you mean an absolute growth of 4%, or 4% of the dividend? If it is the later, you will receive 1.25% per quarter. If it is the former, you will receive 0.26% per quarter. For the third year the same question applies: absolute or relative? For absolute, you will receive 2.25% per quarter. For relative, you will receive 0.27% per quarter. Whichever is the case, multiply the percentage by the stock price to determine what the dividend. You will receive that every quarter for the three years. If you hold it for three years, and then sell, you may get the final dividend. Assuming that the company pays the dividend on the exact business day (or sooner)three years later, you will be holder of record before the ex-dividend date, and you will get the final dividend.

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