my broker recommends that i purchase a stock for $60.00. stock pays $2.40 in annual dividends and expects to grow 8%/year. Is this a good buy?

Question

my broker recommends that i purchase a stock for $60.00.  stock pays $2.40 in annual dividends and expects to grow 8%/year.  Is this a good buy?

Ms. Sue · Answer

Just because the company expects to grow 8% a year, doesn't mean the price will also grow 8% a year. What is the company's PE ratio? Buying any stock is risky!!