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Dividend discount model (constant growth)
Value a steady dividend payer from its dividend, growth and your required return.
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Model value per share
$49.92
This is 4.0% below the price you entered ($52.00).
- Next year’s dividend
- $2.50
- Implied yield
- 5.00%
- Yield at your price
- 4.62%
The formula
Value = D₀ × (1 + g) ÷ (r − g)
Known as the Gordon growth model. It suits mature companies whose dividend grows at a stable rate, such as utilities and consumer staples.
It only works when the required return is higher than growth, and the result is very sensitive to both.
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Build the full model online, with scenarios, sensitivity tables and charts saved to your account.