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The dividend growth model projects future dividend payments based on a constant growth rate. Used to estimate intrinsic stock value assuming dividends grow perpetually.
Formel
Stock Value = D₁ / (r - g) where D₁ is next dividend and r is required return
Trin-for-trin guide
- 1Enter current dividend, growth rate, and required return
- 2Calculate next year's dividend
- 3Divide by the difference between required return and growth rate
Løste eksempler
Input
Current div: $2, growth: 5%, required return: 10%
Resultat
Stock value ≈ $42
$2.10 / (0.10 - 0.05)
Almindelige fejl at undgå
- ✕Assuming growth rate exceeds required return
- ✕Using current instead of next dividend
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