06-23-2016, 12:39 PM
Basically, assuming a stock will indeed continue to pay increasing dividends in the future and you won't be selling this stock for a very long time, you care about two components. How much does the stock pay now versus the price (dividend rate)? How do you estimate the rate at which this dividend will grow going forward (chowder rule picks the 5 year dividend growth rate)?
Chowder Rule:
"The formula is simply the sum of the current dividend yield plus the five-year annual dividend growth rate "DGR" of a stock. Chowder uses 8 as a minimum number for utilities yielding 4% or more, 12 for stocks yielding 3% or more, and 15 for stocks yielding less than 3%."
For example, would you personally prefer stock A, B or C:
A) pays a 5% dividend now and you think it will grow at a rate of 5%
B) pays a 3% dividend now and you think it will grow at a rate of 10%
C) pays a 1% dividend now and you think it will grow at a rate of 15%
Discussion on the Chowder Rule:
http://dividendgrowthforum.com/showthread.php?tid=437
http://seekingalpha.com/article/3622896-...-guideline
http://seekingalpha.com/article/1967371-...ndustrials
Chowder Rule:
"The formula is simply the sum of the current dividend yield plus the five-year annual dividend growth rate "DGR" of a stock. Chowder uses 8 as a minimum number for utilities yielding 4% or more, 12 for stocks yielding 3% or more, and 15 for stocks yielding less than 3%."
For example, would you personally prefer stock A, B or C:
A) pays a 5% dividend now and you think it will grow at a rate of 5%
B) pays a 3% dividend now and you think it will grow at a rate of 10%
C) pays a 1% dividend now and you think it will grow at a rate of 15%
Discussion on the Chowder Rule:
http://dividendgrowthforum.com/showthread.php?tid=437
http://seekingalpha.com/article/3622896-...-guideline
http://seekingalpha.com/article/1967371-...ndustrials