Since April of 2001 the dividend for Wrigley has been growing at a rate of 11.5% per year. With all else being equal the dividend in 2012 will be $2.00 per share. With a pay out of 2% the stock would be worth $100.00 per share in 5 years. That will give a return of 11.2% on the capital per year. With dividend reinvesting the total rate of return is 13.75% per year.
That is with all being equal. The recent earnings quarter reminded us that all is not equal. Wm Wrigley has jump sales growth in Asia and Europe. They have secured named brand recognition throughout the world. Their small ticket item allowed them not only to increase the number of units sold in Asia, but also allowed them to increase the price of their product. There no reason to believe all will be equal over the next five years. Wrigley should have no problem in accelerating earnings growth and accelerating dividend growth by which the fundamentals reasons for stock ownership will continue to accelerate.
There is no need to create fantasy valuation of Wrigley through sales ratio, PE ratios, book value or any of the other nonsense the tech analyst used in 2000 to get you to buy Cisco at $68 per share, or Nortel Network at $110, or any of the hundreds that are now worth ZERO. Wrigley is real. Reality counts for something.
$59.06 (05/01/07)
