- So regardless of whether a company currently pays a dividend or not, the true value of that company is based solely on its expected future dividends and other cash returns.
- The first thing to remember when you're estimating future dividends is that your investment returns will largely depend on them, so your estimate should be conservative and realistic.
- Another important factor that can limit a company's growth is the rate of return it gets on capital employed within the business.
For further details see:
How To Value Shares With The Dividend Discount Model