The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Dividend Growth Investing

URL:  http://boards.fool.com/mark-what-annual-rate-is-this-this-annual-rate-30600766.aspx

Subject:  Re: VL Dividend Growth with Low Risk (3-'13) Date:  3/21/2013  3:35 PM
Author:  kelbon Number:  7930 of 10875

Mark,

What annual rate is this?

This annual rate does not refer to stock prices, it refers only to the dividend.

It's the average CAGR (compounded annual growth rate) of dividend increases. That is, the average annual rate that the companies in question raised their dividends by over a five year period.

For example let's take (hypothetical) company A:

Let's say that five years ago company A's annual dividend payment was $1.00.

The next year company A raised its dividend 7%. Therefore, the new annual dividend distribution was now $1.07

The following year they raised their dividend another 7%. Therefore the new dividend payment was $1.145.

And so on, another 7% each year. $1.225; followed by $1.31; followed by $1.40, etc.

kelbon
Copyright 1996-2017 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us