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Need help asap, don't know what i need to use ie. formulas and such The Little Secret of Dividend Case Study: Ticker: Industry: American Electric
Need help asap, don't know what i need to use ie. formulas and such
The Little Secret of Dividend Case Study: Ticker: Industry: American Electric Power Company, Inc. AEP Electric Utility BUSINESS: American Electric Power Company, Inc. (AEP), through 10 operating utilities, serves 5.4 mill. customers in Arkansas, Kentucky, Indiana, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia, & West Virginia. Electric rev. breakdown: residential, 40%; commercial, 23%; industrial, 19%; wholesale, 15%; other, 3%. The dividend data for the last 11 years are shown below: AEP Div per sh Payout Avg DivYld 2006 $1.50 53% 4.1% 2007 $1.58 55% 3.4% 2008 $1.64 55% 4.2% 2009 $1.64 56% 5.5% 2010 $1.71 66% 4.9% 2011 $1.85 60% 5.0% 2012 $1.88 63% 4.6% 2013 $1.95 62% 4.2% 2014 $2.03 61% 3.8% 2015 $2.15 60% 3.8% 2016 $2.27 59% 4.0% 1. From the data, compute the stock prices implied by the average dividend yield for each year (create a Table) 2. Compute the last 10 annual growth rate % in dividend. Create a Table 3. Compute the Average growth rate for the last 3 years, the last 5 years and the last 10 years. (2016 backwards) 4. Comment on the growth rates in 2 and 3 and your projected growth for the next 3 to 5 years. 5. Despite an increase in dividend per share over time, the dividend yield remains the same at around 4.3%. Why do you think that is? 6. If I purchased the AEP stock at today's market price of around $57, I will be getting only around 4.3% dividend yield even after 10 years of holding the stock. That's not high enough if bond yields were to rise to 4% in the future. Agree or disagree and explain your reasonsStep by Step Solution
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