Finance

Dividend Discount Model Calculator

Value a stock with the Gordon growth model.

Parameters Live Compute
Calculated Output
Intrinsic value ($) 40
Formula: P = D₁ ÷ (r − g)
Step-by-Step Breakdown
1. Values used:
2. Next year's dividend = 2 $
3. Required return = 8 %
4. Dividend growth rate = 3 %
5.
6. Intrinsic value = 40$
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The Gordon growth model values a stock from its growing dividends.

The math behind it

P = next dividend ÷ (required return − growth rate). Requires growth < required return.

Worked Example

$2 ÷ (8% − 3%) → $40.

Frequently Asked Questions

Growth ≥ return?

The model breaks down; it only works when growth is below the required return.

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