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Wilkie model

A

Ali10

Member
Please can someone explain where the Wilkie model for dividend growth comes from? I can reason the others but a bit lost with this one. Thanks.
 
Wilkie model for dividend growth

Essentially:

K(t) = a constant addition to a smoothed inflation measure, but with adjustments, due to zero-mean variable "shocks" feeding in from the equity dividend yield and dividend income processes.

It's worth stressing that this is just one possible model - the key question for you to ask is: "Am I happy that K(t) should depend on these factors?". Hopefully, they all seem reasonable.
 
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