Definition and Significance
- Definition: The dividend growth rate is the annual percentage rate at which a company increases its dividend payments to shareholders.
- Significance: A higher dividend growth rate can indicate a www.bigcityrollers.com company’s robust earnings growth and its commitment to 주식 rewarding shareholders. It also suggests the potential for higher income streams for investors in the future.
Calculating Dividend Growth Rate
There are several methods to calculate the dividend growth rate, depending on the available data and the desired time frame.
Historical Dividend Growth Rate
The historical dividend growth rate looks at the increase in dividends over a past period, such as five or ten years.
- Formula:
Dividend Growth Rate=(DPSfinalDPSinitial)1n−1\text{Dividend Growth Rate} = \left( \frac{\text{DPS}_{\text{final}}}{\text{DPS}_{\text{initial}}} \right)^{\frac{1}{n}} – 1
Where:
- DPSfinal\text{DPS}_{\text{final}} = Dividend per share at the end of the period
- DPSinitial\text{DPS}_{\text{initial}} = Dividend per share at the beginning of the period
- nn = Number of years
- Example: If a company paid a dividend of $2 per share five years ago and pays $4 per share today, the five-year dividend growth rate is:
