Growth Factors

Dividend Adjusted PEG Ratio

As an alternative to the PEG ratio, this ratio compares growth to earnings, while also taking the dividends into account. Peter Lynch mentioned this in his book One up on Wall Street.

$$\mathrm{Dividend\; Adjusted\; PEG\; Ratio}=\frac{\frac{\mathrm{Price-to-Earnings\; Ratio}}{100}}{(\mathrm{Earnings\; Growth\; 1y}+\mathrm{Dividend\; Yield})}$$

Whilst Mr. Lynch uses the term Dividend Adjusted PEG, he really uses the inverted formula, since this one makes it easier to sort on.

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