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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

Trinn-for-trinn guide

  1. 1Enter current dividend, growth rate, and required return
  2. 2Calculate next year's dividend
  3. 3Divide by the difference between required return and growth rate

Løste eksempler

Inndata
Current div: $2, growth: 5%, required return: 10%
Resultat
Stock value ≈ $42
$2.10 / (0.10 - 0.05)

Vanlige feil å unngå

  • Assuming growth rate exceeds required return
  • Using current instead of next dividend

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