Seagate Technology is a global leader in data storage solutions and a high yield
ID: 2817405 • Letter: S
Question
Seagate Technology is a global leader in data storage solutions and a high yield dividend payer. From 2015 through 2019, Seagate paid the following per-share dividends:
Year Dividends per share
2019 $2.52
2018 $2.25
2017 $1.83
2016 $1.19
2015 $1.52
Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use 20% required rate of return to find the value of Seagate's stock immeadiately after it paid its 2019 dividend of $2.52.
Explanation / Answer
arithmetic average growth rate = 16.76%
value of the share = 2.52 * 1.1676/(0.20 - 0.1676) = 90.68
year value return 0 1.52 1 1.19 -21.71% 2 1.83 53.78% 3 2.25 22.95% 4 2.52 12.00%Related Questions
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