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AT&T, Inc. Message Board

  • jwaltz234 jwaltz234 May 7, 2014 9:33 AM Flag

    Stock Price vs. Dividend

    If the stock price reaches $50 within 2 years as some predict, is there a way to calculate what the dividend would be at that price ?

    Sentiment: Strong Buy

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    • He might mean what the percentage Dividend will be. i.e. currently it is about 5% with the stock at ~ 36. If the stock is at 50 and the divvie increases its typical .01/year , you can do that calculation. not sure it means or proves much.

    • jwaltz -- You usually seem brighter than this. Dividends are not a function of the stock price. It's the other way around.
      T has increased its January quarterly dividend by 1 cent every year since 2009.
      Jan 2008 = $0.40
      Jan 2009 = $0.41
      Jan 2010 = $0.42
      Jan 2011 = $0.43
      Jan 2012 = $0.44
      Jan 2013 = $0.45
      Jan 2014 = $0.46
      Notice a pattern?
      Jan 2015 = $0.47?
      Jan 2016 = $0.48?
      $0.48 x 4 = $1.92 annual indicated dividend, which, if the price is $50, is only a 3.84% yield.
      If the market requires a 5% yield the price would be only $38.40.

      • 1 Reply to sumfax
      • Sumfax ! Thank you for that great explanation ! I know about the .01/year increase but, did not know how to calculate the fluctuation of the dividend with price movement. My calculations are as follows!
        $1.92 / $50 share price = .0384 x 100 = 3.84 % ! When you say " if the market required a 5% yield the price would be $38.40. Meaning, the market would not buy over that price ?

        Sentiment: Strong Buy

    • only in a general sense, best to use history of div. to project future. a chart on price is often more volatile than div. good companies try to keep div. stable and increasing. a change in div. can cause a big change in price. especially if reduced or suspended. a good div. is one that at least matches inflation.

 
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