At the last minute, Jenna considers investing in 3M stock at the current market price. The stock just paid its quarterly dividend and she expects the dividend to grow based on historical rates. If the next dividend is due next year (simplifying assumption) what is the expected return on 3M stock for the period?

• Use yahoo finance for the stock price and dividend data.

https://finance.yahoo.com/

• Use quarterly dividend data (from the Historical data area) to convert to annual data and calculate growth rates.

• Use the DDM to calculate the return.

• What are the issue(s) with using the DDM to value a stock?

• If a company does not pay dividends what models should Jenna use? Be specific.