An example of a common stock valuation method that relies on forecasted dividends is:

The correct answer involves discounted cash flow (DCF) valuation, particularly in the context of stock valuation that uses forecasted dividends. This method bases the intrinsic value of a stock on the present value of expected future cash flows, which, in the case of common stocks, often takes the form of dividends. The DCF valuation entails projecting the company's future dividends and then discounting those amounts back to their present value using an appropriate discount rate, typically the required rate of return for equity investors.

This approach is particularly effective for companies that have a reliable history of paying and growing dividends, as it incorporates both the time value of money and the expected growth of dividends over time. By focusing on forecasted dividends, investors can derive a clear and systematic method for evaluating the attractiveness of an investment in a particular stock relative to its market price.

In contrast, other methods mentioned would not emphasize forecasted dividends in the same way. Relative valuation compares the stock with similar firms or valuation multiples without focusing on cash flows or dividends. Asset-based valuation estimates a company's worth based on its net assets, disregarding cash flows entirely. Comparable company analysis assesses the valuations of similar firms but does not specifically forecast dividends for a given stock. Thus, the recognition of future dividends as