Which factors determine how much you should be willing to pay for a stock ?? What makes one company worth 10 times earnings and another worth 20 times?? How can you be reasonably sure that you are not overpaying for an apparently rosy future that turns out to be a murky nightmare ??
Five elements are decisive :
- the company's general long term prospects
- the quality of its management
- its financial strength and capital structure
- its dividend record
- and its current dividend rate
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