STL Price Forecast Based on Dividend Discount Model

A technique commonly used by dividend investors to value dividend-issuing stocks is the Dividend Discount Model (DDM), which seeks to determine a fair share price based on the dividend provided by the company relative to a number of other company-specific factors. As for STL, the DDM model, as implemented by StockNews, implies a negative return of 71.53% relative to its current price. Some interesting points we thought investors may wish to consider regarding the dividend discount model forecast for Sterling Bancorp are:

• If we compare the valuation opportunity a dividend discount model provides relative to other dividend stocks in the Financial Services sector, the expected return of -71.53%, based on the stock's current share price and target price based on a dividend discount model, is greater than just 12.18% of the DDM-forecasted return of its its sector peers.
• Out of all stocks in our universe of US-listed dividend-issuing stocks, Sterling Bancorp bears a discount rate, according to our calculations, lower than just 12.18% of them (lower discount rates are generally perceived as positive, and a sign of lower risk).
• A stock's beta generally indicates its volatility relative to the broader equity market; as for STL, approximately 3.32% of US-listed dividend issuers had a higher beta, and thus may have greater price volatility.
• As other dividend issuers in the Financial Services sector, STL's equity discount rate is less than 2.95% of those stocks.

STL Dividends vs. Peers