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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.

Формула

Stock Value = D₁ / (r - g) where D₁ is next dividend and r is required return

Водич корак по корак

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

Worked Examples

Инпут

Current div: $2, growth: 5%, required return: 10%

Резултат

Stock value ≈ $42

$2.10 / (0.10 - 0.05)

Common Mistakes to Avoid

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

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