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A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive dividends directly as cash; instead, the investor's dividends are directly reinvested in the underlying equity.
The waves of the reinvestment process, when firms invest large amounts of cash in some years and nothing in others, can cause the FCFE to be negative in the big reinvestment years and positive in others; [5] FCFF is a preferred metric for valuation when FCFE is negative or when the firm's capital structure is unstable.
Reducing debt can also produce a de facto dividend; assuming the value of the firm remains the same, shareholder value is increased as debt is reduced. To understand how debt reduction increases shareholder value , it is helpful to consider the 1958 paper by Nobel laureates Franco Modigliani and Merton H. Miller entitled The Cost of Capital ...
Where there's smoking payout growth, there's a hot dividend yield. IBM's rising payouts have also resulted in a rich dividend yield of 3.5%. The average yield among S&P 500 stocks is 1.3%, ...
The cost of debt may be calculated for each period as the scheduled after-tax interest payment as a percentage of outstanding debt; see Corporate finance § Debt capital. The value-weighted combination of these will then return the appropriate discount rate for each year of the forecast period.
Before having a look at the importance of debt, let us look at how much debt IBM has.IBM's Debt According to the IBM's most recent financial statement as reported on July 28, 2020, total debt is ...
A dividend recapitalization (often referred to as a dividend recap) in finance is a type of leveraged recapitalization in which a payment is made to shareholders. As opposed to a typical dividend which is paid regularly from the company's earnings, a dividend recapitalization occurs when a company raises debt —e.g. by issuing bonds to fund ...
When looking at IBM stock, the valuation metric that stands out to me is its price-to-free-cash-flow ratio of 18, which measures the company's $215.2 billion market capitalization against the $12. ...