Expected Dividend Growth for the Next 5 Years
What is the expected dividend per share for each of the next 5 years?
Thress Industries just paid a dividend of $3.25 a share. The dividend is expected to grow 8% a year for the next 3 years and then 12% a year thereafter. What is the expected dividend per share for each of the next 5 years?
Expected Dividend Per Share for Each of the Next 5 Years:
Year 1: $3.51
Year 2: $3.79
Year 3: $4.10
Year 4: $4.59
Year 5: $5.14
To calculate the expected dividend per share for each of the next 5 years, we need to consider the current dividend of $3.25 and the growth rates for the next 3 years and thereafter.
First, we calculate the dividend for the next 3 years using the 8% growth rate:
Year 1 dividend = $3.25 * (1 + 0.08) = $3.51
Year 2 dividend = $3.51 * (1 + 0.08) = $3.79
Year 3 dividend = $3.79 * (1 + 0.08) = $4.10
Next, we calculate the dividend for the following 2 years using the 12% growth rate:
Year 4 dividend = $4.10 * (1 + 0.12) = $4.59
Year 5 dividend = $4.59 * (1 + 0.12) = $5.14
Therefore, the expected dividend per share for each of the next 5 years is as follows:
Year 1: $3.51
Year 2: $3.79
Year 3: $4.10
Year 4: $4.59
Year 5: $5.14