Info

Disney

Aracruz ADR

Insider Holdings

2.60%

20.00%

Capital Expenditures/Total Assets

2.10%

2%

Debt/ Capital

21.02%

31%

Expected growth in Earnings

8.00%

23%

Substituting into the regression equation for the dividend payout ratio, we predicted the following payout ratios for the two firms:

For Disney = 0.3889 - 0.738 (0.021)- 0.214 (0.026) + 0.193 (0.2102) - 0.747 (0.08) = 34.87%

For Aracruz ADR = 0.3889 - 0.738 (0.02)- 0.214 (0.20) + 0.193 (0.31) - 0.747 (0.23) = 21.71%

Substituting into the regression equation for the dividend yield, we predict the following dividend yields for the two firms: For Disney = 0.0205 - 0.058 (0.021)- 0.012 (0.026) + 0.0200 (0.2102)- 0.047 (0.08)= 1.94%

For Aracruz ADR = 0.0205 - 0.058 (0.02)- 0.012 (0.20)+ 0.0200 (0.31)- 0.047 (0.23) = 1.22%

Based on this analysis, Disney with its dividend yield of 0.91% and a payout ratio of 32.31% is paying too little in dividends. Aracruz with a payout ratio of 37.41% and a dividend yield of 3% provides a mixed finding is paying too much in dividends, though the conclusion has to be tempered by the fact that the company is being compared to companies in the United States.

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Retirement Planning For The Golden Years

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