Dividend Discount Model (DDM) Calculator

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Gordon Growth assumes constant dividend growth forever. Two-stage uses a high-growth period then a stable terminal rate. Reverse DDM solves for the implied growth rate given the current market price.
The most recent annual dividend per share paid by the company (trailing 12 months). Use the annualized rate if the company pays quarterly.
The expected constant annual growth rate of dividends. For the two-stage model this is the high-growth rate for the first phase. Must be less than the discount rate.
%
Enter a required return directly, or use the CAPM formula (risk-free rate + beta x market risk premium).
The minimum annual return you require from this investment. Often set as the cost of equity derived from CAPM.
%
If entered, the calculator shows whether the stock appears over- or under-valued vs. your fair value estimate.
Currency
Fair Value Per Share
$41.60

Intrinsic value of the stock based on the selected DDM variant

Expected Next Dividend (D₁)$2.0800

DDM fair value: 41.60 per share.

  • The projected dividend for the coming year is 2.0800 per share.
  • The (r - g) spread is 5.00%. The DDM is highly sensitive to this gap: a 1 percentage-point change in either input can shift fair value dramatically.
  • DDM is best suited to stable, dividend-paying companies such as utilities, telecoms, and consumer staples. It is unreliable for growth stocks that reinvest earnings or non-dividend payers.

Next stepTest your assumptions by adjusting the growth rate and discount rate by 1 percentage point each way. If the fair value range still brackets the current price, the valuation is reasonably robust.

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