Choose four Australian listed companies (one each from four different sectors) that have been in business for at least the last ten years. Access Morningstar Datanalysis Premium via the Deakinlibrary (refer to the Assignment Part – 2 instructions document). Download onto a spreadsheet the last ten years (01/07/04 to 30/06/14) of dividend payments history for each of your four chosen companies.
Investment in stock markets is a blend of appetite for risk and reward. One would be induced to invest in stock markets only if he foresees a positive reward for the same. Reward of investing in stock markets is the dividend earned, and it depends upon the profit made by the organisation. (Taillard,2012)
Thus, analysis of where and when to invest involves analysis of dividend so as to understand fairly the possible results of investment and to decide whether to invest or not?
To make this tedious and confusing task simple have been established several models that facilitate analysis of dividend and thus the analysis of stock. This enables investment decision making to a greater extent.
One of the most credible and used method of dividend valuation is the Gordan’s Dividend Growth Model also known as Gordon Constant Growth Dividend Valuation Model and is based upon the work of Myron. J.Gardon in 1960. This model helps in determining the intrinsic value of a stock, exclusive of the persisting market condition and it assumes that dividends shall grow at a fixed/constant rate till perpetuity. (Higgins, 2008)