eoin

canadiananalyst Wrote:
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> I get that but is that referring to earnings
> growth or dividend growth?
>
> I understand they are dependent on one another
> however if you have low dividends in one yr,
> despite high earnings, that means reinvestment in
> cap expenditures which means future high growth of
> dividends.
>
> I thought that the 3 stage model was designed to
> reflect high earnings growth with low dividend
> distribution eventually which will lead to higher
> distribution as the company matures.
> That's a more realistic scenario than the reverse
> which is discussed by the book.


Just went over this so I hope I have it right.

Re your last paragraph: You could still figure out the PV of the stock using the same framework as discussed in the readings. So maybe it's just presented that way to make it easier to learn? IDK.