You expect the dividend to grow steadily at a rate of 4 percent per year. What is the expected stock price three years from now?
The stock price of a growth stock is only fractionally dependent
on the dividend. I assume that you are talking about a growth stock
since you ask about the future price of the stock. There are many
other factors that are far more influential in the price of a stock
than the dividend. Some, but not nearly all, are: 1. The earnings,
and expected future earnings, of the company and it's market
sector. 2. The market capitalization of the stock. This is the
number of shares times the price per share. 3. The
earnings-per-share. A stock with an 18X earnings-per-share might be
overvalued if the average EPS of its direct competitors was 14X.
Conversely, if the EPS of its competitors were 22X as an average,
the stock might be undervalued. 4. Quality of Management.
Confidence in management is an important factor. 5. Company
buy-back. If a company is actively buying back its stock there are
fewer shares outstanding which could, over time, help the price to
rise. Always remember, the stock market is only an auction house.
If there are more buyers wanting to own the stock than there are
sellers willing to sell, the movement of the stock price will be
higher. And, of course, vice versa.