3 Dividend Growth Stocks selected by Gordon Model

3 Dividend Growth Stocks selected by Gordon Model

"In implementing the hypothesis it must be recognized that the stockholder is interested in the entire sequence of dividend payments that he may expect and not merely the current value. ... The yield is 4%. The 5-yr dividend growth rate is 6.4%. Thus the Gordon yield would be 10.4%. The fair p/e would be 1/ Gordon yield=9.61. The higher the dividend growth rate, the more the stock is improperly modeled—due to its deviation from bond status. In practice, I simply add the yield + dividend growth rate to get a fair p/e of 10.4."

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