Forum Archive Index - May 2001

["Tony" <tony@ltdrisk.com>]

I have used the Dividend Discount Model (DDM) on TEL as follows:

Price = Dividend / (discount rate - growth rate in dividends)

where dividend=23c
discount rate = riskless rate(5.95%) + risk premium 0.5%
and then solved for growth, given the market price of $5.60.
The market is seeing 2.34% growth in dividends from this formula.

AT a market price of $6.5 growth needs to be 2.94%

Does anyone know what TEL's growth in dividends promises/intentions are wrt
their investments in their networks, other companies, etc?
Is 2.94% realistic?

I have noted from their annual report that their didvidends paid out last
year exceeded their earnings (ie $894m vs $783m). and am hoping that they
earn more than their dividend payout this year else I think the price will
go down.

I own TEL and have bought recently at these bargain prices (before I did the
analysis!) but am not so sure anymore.

tonyDB


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