Dividend Value Calculator


Year Input Gross
Value		 After-Tax
Value		 Present
Value
(cents)
Purchase Price (cents)
Risk-Free Interest Rate  (%)  (%)
Top Personal Tax Rate  (%)
Company Tax Rate  (%)
Dividend Franking Rate  (%)
Dividends Expected Next Year (cents)
Expected Long-Term Dividend Growth Rate  (%)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Present Value of Dividends
Terminal Value
Dividend in the Next Year 16
Projected End Dividend Yield  (%)
End Sale Value
Capital Gain
Taxable Portion of Gain  (%)
Capital Gains Tax Rate  (%)
Present Value of Net Cash Flows
Margin of Safety
Margin as % of Purchase Price  %

     

Warning: The Dividend Value Calculator is a handy investment tool designed to provide guidance as to the investor's margin of safety. It does not estimate current market value. Investors are required to make their own estimate of current value based on their assessment of the required margin of safety, which is in turn dependent on their assessment of investment risk. Investors should also beware that the quality of the results is dependent on the quality of their input. This tool should not be used as a substitute for sound investment advice from a stockbroker or financial advisor. We do not accept liability for investment decisions made using the Dividend Value Calculator.



Example (1)
An Australian investor may have a stock price of 2000 cents; a risk-free rate of 6% and a top personal tax rate of 48%. The company may have a tax rate of 30% and expect to pay 80 cents in fully-franked (100%) dividends which are expected to grow at an average rate of 10% over the next 15 years. The stock is projected to be eventually sold at a conservative dividend yield of 5% (compared to the current 4%). Half of capital gains (50%) are taxed at the top personal rate of 48%. The resultant present value (at the risk-free rate) is 4919 cents, providing a 146% margin of safety.

Example (2)
If the same investor in (1) has a top personal tax rate (and capital gains rate) of 10%, the margin of safety is very similar at 147%. The lower tax rate has two effects that tend to offset each other: