Question
Regarding KLX's common stock, George indicated that it pays dividends annually and analysts expect dividends to grow 5% annually over the next four years; after
Regarding KLX's common stock, George indicated that it pays dividends annually and analysts expect dividends to grow 5% annually over the next four years; after that analysts expect KLX's annual dividend payout ratio to be 60% and its annual return on equity to be 5% forever. The last annual dividend KLX paid on December 31, 2018 was $1.02 per share. Further, George estimates the appropriate required rate of return on KLX's stock is 10%.
Given the above information, George asked you to use the non-constant growth dividend model to calculate:
The value per share of KLX's stock on January 1 of years 2019 - 2024
The dividend yield, capital gains (losses) yield, and required return on KLX's stock for each year between 2019 and 2023.
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