Bot GPT 4-o mini To find the expected growth rate of the dividend, we can use the Gordon Growth Model (also known as the Dividend Discount Model). The formula is given by:
\[ P = \frac{D_1}{r - g} \]
Where:
- \( P \) is the price of the stock,
- \( D_1 \) is the expected dividend next year,
- \( r \) is the required rate of return,
- \( g \) is the growth rate of the dividend.
Plugging in the values we have:
- \( P = 23.70 \)
- \( D_1 = 1.82 \)
- \( r = 11.41% = 0.1141 \)
Rearranging the formula to solve for \( g \):
\[ g = r - \frac{D_1}{P} \]
Now we can substitute the values into the equation:
\[ g = 0.1141 - \frac{1.82}{23.70} \]
Calculating \( \frac{1.82}{23.70} \):
\[ \frac{1.82}{23.70} \approx 0.0767 \]
Now substituting this value back into the equation for \( g \):
\[ g = 0.1141 - 0.0767 \approx 0.0374 \]
To express \( g \) as a percentage, we multiply by 100:
\[ g \approx 3.74% \]
Thus, the expected growth rate of the dividend is approximately 3.74%.
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