What rate of return do investors require on General Electric (ticker: U:GE) common stock? Use the annual dividends per share reported for the last fi ve years to determine the compound annual growth rate in dividends.
Assume that General Electric maintains this growth rate forever and has just paid a dividend.
Use the latest available closing price as the current stock price. How does this required rate of return compare with the compound annual stock return over the last fi ve years? Have investors been compensated sufficiently?