In 2014, Best Buy Corp. paid a quarterly dividend of $0.0667 per share, but by 2020 that figure had increased to $0.15 per share. From 2014 to 2020, Best Buy’s earnings grew from $705 million to $1.3 billion. Over this period, which grew faster, dividends or earnings? Does this surprise you? Why or why not?

In 2014, Best Buy Corp. paid a quarterly dividend of $0.0667 per share, but by 2020 that figure had increased to $0.15 per share. From 2014 to 2020, Best Buy’s earnings grew from $705 million to $1.3 billion. Over this period, which grew faster, dividends or earnings? Does this surprise you? Why or why not?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter11: Investment Planning

Section: Chapter Questions

Problem 7FPE: Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for...

See similar textbooks

Similar questions

Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. What was the amount of revenues (i.e., sales) generated by the company in 2017? What were the latest annual dividends per share and dividend yield? What is the earnings per share (EPS) projection for 2019? How many shares of common stock were outstanding? What were the book value per share and EPS in 2017? How much long-term debt did the company have in the third quarter of 2018?
Brooks Sporting Inc. is prepared to report the following 2018 income statement(shown in thousands of dollars). Prior to reporting this income statement, the company wants to determine its annual dividend.The company has 320,000 shares of common stock outstanding, and its stock tradesat $37 per share.a. The company had a 25% dividend payout ratio in 2017. If Brooks wants to maintainthis payout ratio in 2018, what will be its per-share dividend in 2018?b. If the company maintains this 25% payout ratio, what will be the current dividendyield on the company’s stock?c. The company reported net income of $1.35 million in 2017. Assume that the numberof shares outstanding has remained constant. What was the company’s per-share dividendin 2017?d. As an alternative to maintaining the same dividend payout ratio, Brooks is consideringmaintaining the same per-share dividend in 2018 that it paid in 2017. If it choosesthis policy, what will be the company’s dividend payout ratio in 2018?e. Assume…
he newspaper reported last week that Tisch Enterprises earned $34.17 million this year. The report also stated that the firm’s return on equity is 18 percent. The firm retains 75 percent of its earnings. What is the firm's earnings growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Earnings growth rate % What will next year's earnings be? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Next year’s earnings $ Synovec Corp. is experiencing rapid growth. Dividends are expected to grow at 28 percent per year during the next three years, 18 percent over the following year, and then 5 percent per year indefinitely. The required return on this stock is 10 percent, and the stock currently sells for $98 per share. What is the projected dividend for the coming year? (Do not round intermediate…
The newspaper reported last week that Tisch Enterprises earned $34.17 million this year. The report also stated that the firm’s return on equity is 18 percent. The firm retains 75 percent of its earnings. What is the firm's earnings growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Earnings growth rate % What will next year's earnings be? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Next year’s earnings $
In 2018, Keenan Company paid dividends totaling $3,600,000 on net income of $10.8 million. Note that 2018 was a normal year and that for the past 10 years, earnings have grown at a constant rate of 10%. However, in 2019, earnings are expected to jump to $14.4 million and the firm expects to have profitable investment oppor tunities of $8.4 million. It is predicted that Keenan will not be able to maintain the 2019 level of earnings growth because the high 2019 earnings level is attributable to an exceptionally profitable new product line introduced that year. After 2019, the company will return to its previous 10% growth rate. Keenan's target capital structure is 40% debt and 60% equity.a. Calculate Keenan's total dividends for 2019 assuming that it follows each of the follow ing policies:1. Its 2019 dividend payment is set to force dividends to grow at the long-run growth rate in earnings.2. It continues the 2018 dividend payout ratio.3. It uses a pure residual dividend…
XYZ, Inc. declared on January 1, 2015, that it will pay a cash dividend of $1.00 per share at the end of 2015. Analysts expect that DPS (dividends per share) will grow at a rate of 20% each year for 2016 and 2017, and at 4% a year thereafter. Dividends are paid annually. Shareholders’ required rate of return is 15% per year in 2016 and 2017, and 8% thereafter. What is the share price on January 1, 2015?
Waller Company paid a $0.150 dividend per share in 2000, which grew to $0.324 in 2012. This growth is expected to continue. What is the value of this stock at the beginning of 2013 when the required return is 15.0 percent?
The Bouchard Company's EPS was $5.40 in 2021, up from $3.26 in 2016. The company pays out 50% of its earnings as dividends, and its common stock sells for $33.00. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. % The last dividend was D0 = 0.50($5.40) = $2.70. Calculate the next expected dividend, D1, assuming that the past growth rate continues. Do not round intermediate calculations. Round your answer to the nearest cent. $ What is Bouchard's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. % Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 12%, a before-tax cost of debt of 12%, and a tax rate of 25%. The company's retained earnings are adequate to provide the common equity portion of its capital budget.…
The Ola Nacho Company paid a $1.00 dividend in 2016. If the current dividend in 2019 was $1.20, what was the growth rate of the dividend?
A company had additions to retained earnings for the year just ended of Br. 275,000. The firm paid out Br. 150,000 in cash dividends from current earnings, and it has ending total equity of Br. 6 million. If the firm currently has 125,000 shares of common stock outstanding, what are earnings per share? Dividends per share? Book value per share? If the stock currently sells for Br. 95 per share, what is the market-to-book ratio? And, the price-earnings ratio?
In mid-2015, Coca-Cola Company (KO) had a share price of $39. Its dividend was $1.00 per year, and you expect Coca-Cola to raise this dividend by approximately 7% per year in perpetuity. If Coca-Cola’s equity cost of capital is 8%, what share price would you expect based on your estimate of the dividend growth rate? Given Coca-Cola’s share price, what would you conclude about your assessment of Coca-Cola’s future dividend growth?
Blue Co. earns P2,850,000 in 2021 and it has a total outstanding shares of 425,000. On 2022, the earnings increase by P1,087,500 and the number of outstanding shares increased by 25,000. The dividend per share of the firm is constant at 3.5. What is the Plowback ratio in 2022? (type the answer in percentage with “%”)