Dividend Discount Model Calculator

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

Value a stock with the Gordon growth model.

Intrinsic value ($) 40

Formula: P = D₁ ÷ (r − g)

Step-by-step with your numbers:

1. Values used:

2. Next year's dividend = 2 $

3. Required return = 8 %

4. Dividend growth rate = 3 %

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.

$2 ÷ (8% − 3%) → $40.

Growth ≥ return?

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