In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.16. The dividends are expected to grow at 11 percent over the next five years. In five years, the estimated payout ratio will be 35 percent and a benchmark PE will be 18.