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Walgreen Co. Message Board

  • h5n1eric h5n1eric Jun 20, 2012 2:15 PM Flag

    oh, indulge me (we have time)...

    At $30, yesterday, the effective yield was at 3.6% (although not reflected yet, on Yahoo). So, when it pulled back 4% this morning, to 28.80...the effective yield rose to 4%.

    Oh, here's the 'fun' part...With a 5 year avg, divy growth rate of 24%, that would mean the 4% yield would rise to an effective 8% yield, in 3 years ...and double again to 16%, in 6 years.

    Now of course, this is all theoretical , using the current divy growth numbers...and the assumption that the 24% growth rate will 'hold'>... it's just an exercise to remind people of 'the power of compounding'...

    ...Heck , I'll even take a 'divy growth rate' (over the next 8 years) of 18%, and get to the 16% return on capital (yield) on money invested today, in 8 years... vs. the 6, above.

    No one knows the future...You can plug in various 'dividend growth rates' to see the different scenarios & time horizons...

    I suppose I'm looking at the 'risk/reward' in buying shares currently, and cost averaging them...I could see $27...why not?...seems like people are 'talking that number'...and heck, I'd get more, given the above 'divy growth rate scenarios...i.e. take some pain now...and profit later, most likely....(it all depends on your time horizon...and your patience level)

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