| Description |
Scott works for a regional brokerage firm. He estimates that Walkton Industries
will increase its dividend by US$1.50 a share during the next year. He realizes
that this increase is contingent on pending legislation that would, if enacted, give
Walkton a substantial tax break. The US representative for Walkton’s home district has told Scott that, although she is lobbying hard for the bill and prospects
for its passage are favorable, concern of the US Congress over the federal deficit
could cause the tax bill to be voted down. Walkton Industries has not made any
statements about a change in dividend policy. Scott writes in his research report,
“ We expect Walkton’s stock price to rise by at least US$8.00 a share by the end of
the year because the dividend will increase by US$1.50 a share. Investors buying
the stock at the current time should expect to realize a total return of at least 15%
on the stock.” According to the Standards: |