- Dividend Growth Rate
The annualized percentage rate of growth that a particular stock's dividend undergoes over a period of time. The time period included in the analysis can be of any interval desired, and is calculated by using the least squares method, or by simply taking a simple annualized figure over the time period.
The dividend growth rate is necessary in order to use the dividend discount model, which is a security pricing model that assumes that a stock's price is determined by the estimated future dividends, discounted by the excess of internal growth over the firm's estimated dividend growth rate.
A history of strong dividend growth could mean that future dividend growth is likely, which can signal long-term profitability for a given company.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
growth rate — compound annual growth rate for the number of full fiscal years shown. If there is a negative or zero value for the first or last year, the growth is N.M. (not meaningful). Bloomberg Financial Dictionary * * * growth rate ˈgrowth rate noun… … Financial and business terms
dividend growth model — An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equals next year s dividends divided by the difference between the required rate of return and the assumed constant growth rate in dividends.… … Financial and business terms
Dividend growth model — A model wherein dividends are assumed to be at a constant rate in perpetuity. The New York Times Financial Glossary … Financial and business terms
Sustainable growth rate — (SGR) is the maximum rate at which a company can grow revenue without having to invest new capital. If a company earns a 15% return on equity (ROE), it can grow 15% simply be reinvesting all the earnings in new opportunities. In order to grow… … Wikipedia
Supernormal Dividend Growth — A period of time in which the dividends issued on shares of a stock are inceasing at a higher than average rate. The high growth rate of payouts are seen as above normal, thus supernormal . Because this rate is also expected to be unsustainable,… … Investment dictionary
Sustainable Growth Rate - SGR — The maximum growth rate that a firm can sustain without having to increase financial leverage. Calculated as: ROE x (1 dividend payout ratio) The sustainable growth rate is a measure of how much a firm can grow without borrowing more money. After … Investment dictionary
Dividend payout ratio — is the fraction of net income a firm pays to its stockholders in dividends: The part of the earnings not paid to investors is left for investment to provide for future earnings growth. Investors seeking high current income and limited capital… … Wikipedia
Dividend tax — Taxation An aspect of fiscal policy … Wikipedia
Dividend policy — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts … Wikipedia
Rate of return — In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.… … Wikipedia