To calculate the expected dividend per share for each of the next five years, we will use the dividend growth formula:

$D_n = D_0 \times (1 + g)^n$

Where:

• $D_n$ is the dividend in year $n$,
• $D_0 = 3.25$ is the dividend just paid,
• $g$ is the growth rate, which is 6% for the first 3 years and 12% thereafter.

Step-by-Step Calculation:

1. Year 1 (D1):

For the first year, the growth rate is 6%, so: $D_1 = 3.25 \times (1 + 0.06) = 3.25 \times 1.06$ $D_1 = 3.445$

2. Year 2 (D2):

For the second year, the growth rate is again 6%, so: $D_2 = 3.445 \times (1 + 0.06) = 3.445 \times 1.06$ $D_2 = 3.6517$

3. Year 3 (D3):

For the third year, the growth rate is still 6%, so: $D_3 = 3.6517 \times (1 + 0.06) = 3.6517 \times 1.06$ $D_3 = 3.8708$

4. Year 4 (D4):

From year 4 onward, the growth rate increases to 12%. For the fourth year: $D_4 = 3.8708 \times (1 + 0.12) = 3.8708 \times 1.12$ $D_4 = 4.3353$

5. Year 5 (D5):

For the fifth year, the growth rate remains 12%, so: $D_5 = 4.3353 \times (1 + 0.12) = 4.3353 \times 1.12$ $D_5 = 4.8555$

Final Results (rounded to the nearest cent):

• $D_1 = 3.45$
• $D_2 = 3.65$
• $D_3 = 3.87$
• $D_4 = 4.34$
• $D_5 = 4.86$

Would you like further details or explanations?

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Related Questions:

1. What is the total dividend growth over the 5-year period?
2. How would the dividend change if the growth rates were different?
3. What is the present value of the dividends if discounted at 10%?
4. How does this dividend growth affect the stock price?
5. What happens if the 12% growth rate is only sustained for 2 years instead of permanently?

Tip: Always keep track of different growth rates across multiple time periods when forecasting dividends.