The D4L-PreScreen.xls model continues to be the most downloaded and used model in my toolbox. I have just completed an update on it. This update includes some minor tweaks and updates on interest rates used in the model. The changes are described below:
August 2009 Updates
- Added an input field (Cell J12) to enter “Years of consecutive dividend increases”
- Modified Cell B48 to point to the Annual NPV of MMA Differential, which is a more correct value than the cumulative that was previously used.
- Updated the default MMA Yield to 3.90%
- The NPV of MMA Differential target in cell C48 now calculates based on “Years of consecutive dividend increases” input in cell J12.
The 3.90% rate is an average of the last two years highest ending MMA rate that I held. The rate will fluctuate +/- 0.5% as MMA rates change. In addition, I will continue to compare the rate to The 20-Year Treasury Yield. On August 1st, this rate was 4.40%; however, it has continued to drop since then. I will monitor the rate and adjust accordingly in the future.
Years of consecutive dividend increases: Enter here the number of consecutive years the company has increased its dividend. This input will calculated the target NPV of MMA Differential below.
NPV of MMA Differential: This is the net present value of the MMA Differential calculated in the projected information section above for each of the scenarios. The minimum acceptable level (target) for the annual scenario in column C is calculated based on the Years of consecutive dividend increases entered above. This calculation now uses the Annual NPV of MMA Differential, which is a more correct value than the cumulative amount that was previously used.
The examples in Pre-Screening Dividend Stocks – Part II have been updated. The model is free for your personal use. As always, if you run across any bugs or glitches, please be sure to let me know.
This model is for illustrative and educational purposes only. The author and Dividends4Life makes no claims or assertions as to the model’s accuracy, completeness, appropriateness of use, or any other claim or assertion. You are responsible for determining if the models calculations are correct and appropriate for whatever you choose to use the model for.