Wednesday, August 23, 2017

Is Ebay Fairly Priced?

Ebay (NASDAQ:EBAY) is a large cap stock with a market capitalization of $40.55 billion. The company is a commerce company, which operates through its Marketplace, StubHub and Classifieds platforms.


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Monday, August 21, 2017

6 Rainy Day Dividend Stocks

A pessimist might say life is a series of bad things happening, then we die. I certainty wouldn't go that far, but life often deals us unfortunate circumstances to work through at what seems to be the most inopportune time. During the 2007-2008 economic downturn, many people lost their jobs at a time when companies weren't hiring. When things like this happen, those with an alternative income, including dividend growth stocks, are in a better position to deal with the circumstances thrust on them.


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Sunday, August 20, 2017

Weekend Reading Links - August 20, 2017

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:


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Friday, August 18, 2017

Dividend Discount Model Limitations – And How to Manage Them

For each stock analysis I perform on my blog or for my portfolios, I always include a section about valuation. To be honest, the valuation part of my analysis is not my favorite… and not the most important either in my opinion. I prefer working on my investment thesis and assessing potential risks than shaking my crystal ball and give a dollar value on the shares. Is it because I’m bad at giving valuation? Not really. The problem is that I’m well aware that regardless the method I use, there are severe limitations that could make two investors using the same model, but getting completely different results. Today I will take a look at the dividend discount model (DDM) limitations and how I deal with them.

How the Dividend Discount Model Works

The reason I like using the DDM for my work is because the formula is simple and effective. The purpose of this model is giving a value for future dividend payments. It’s basically giving you the value of your “money making machine” based on how much it should pay you back in the future. The model has been built around the following formula:
P is the price of the stock, D1 is next year expected dividend, R is the rate of return (discount rate) and G is the dividend growth rate. Therefore, in order to complete the formula, you “simply” have to determine the discount rate and future dividend growth rate as the payable dividend is already known.


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