Intuit Inc. Dividend Discount Model Valuation

Intuit Inc. offers to shareholders dividend of $3.60 per year at dividend yield of 0.63%. That means for every $100 investment shareholder gets dividend at $0.63. Intuit Inc. declares dividend on quarterly basis and company s dividend payout raised for 11 consecutive years. Management of the company is good as about 65% of its earnings reinvested in the business and delivering consistent dividend growth.

Dividend Growth table

	1 year	3 years	5 years	10 years
Annualized Growth %	15.38%	15.11%	13.88%	16.83%

 

US$ in millions, except per share data, based on values on 09/10/2024

Year	Value	DPS or Terminal Value	Present Value at 15.73%
0	DPS0	3.60
1	DPS1	4.04 = 3.60 x (1+12.16%)	3.49
2	DPS2	4.54 = 4.04 x (1+ 12.89%)	3.40
3	DPS3	5.18 = 4.56 x (1+ 13.61%)	3.34
4	DPS4	5.92 = 5.18 x (1+14.34%)	3.30
5	DPS5	6.81 = 5.92 x (1+15.06%)	3.28
5	Terminal Value (TV5)	1186.55 = 6.81 x (1+15.06%) / (15.33% - 12.06%)	571.68
Intrinsic value of Intuit Inc. common stock (per share)			$588.49
Current share price on 09/10/2024			$626.99

Based on Form 10 K 07/31/2024

Required rate of Return

Assumptions

Rate of return on LT Treasury Composite(Rf)	4.04%
Expected rate of return on market portfolio(E(RM)	13.85%
Systematic risk of Intuit Inc. Common stock (β)	1.19
Required rate of return on Intuit Inc. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.04% +1.19[13.85% - 4.04%]	15.73%

 

DIVIDEND Growth rate (G) Forecast

Intuit Inc. H-Model

Year	Value	gt
1	g1 (PRAT Model)	12.16%
2	g2 (Linear Interpolation)	12.89%
3	g3 (Linear Interpolation)	13.61%
4	g4 (Linear Interpolation)	14.34%
5 and thereafter	g5 (Gordon Growth Model)	15.06%

 

 

 

Dividend Growth rate (G) implied by GORDON GROWTH MODEL

g = 100 X (P₀ X r   D₀) (P₀ + D₀)

= 100 X ($626.99 X 15.73%   $3.60) ($626.99 + $3.60)

= 15.06%

 

Source: https://www.stock-analysis-on.net, Form 10 K 07/31/2024