Course 409:
The Dividend Drill
In this course
1 Introduction
2 Consider the Current Dividend
3 Assess the Company's Core Growth Potential
4 Evaluate the "Excess" Earnings
5 So What's It Worth?
6 The Bottom Line

In the last lesson, we learned about how dividends can establish a firm intrinsic value for a stock and act as a check on management's capital-allocation practices. In this lesson, we'll focus in more detail on how to identify high-quality stocks with good total return prospects.

Breaking total return into current yield and expected dividend growth, we should also sort the growth potential into two buckets--growth in the company's core business (assuming it's profitable growth, that is, or all bets are off) and the growth funded by any remaining free cash flows. We'll call this three-part process the Dividend Drill.

Next: Consider the Current Dividend >>


Search
Print Lesson |Feedback
Del.icio.us Del.icio.us | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2010 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.