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The Dividend Discount Model

Chaplinsky, Susan

Technical Note

The Dividend Discount Model

Chaplinsky, Susan

F-1234 | Published September 28, 1998 | 11 pages. Technical Note

Collection: Darden School of Business

Product Details

This note focuses on the dividend model (DDM), or Gordon Growth Model, as it is sometimes known. The DDM appears in many forms in practice. The note examines its role in estimating the intrinsic value of an equity security and as a model for estimating the required return on equity. It also explores the DDM's link to price-earnings ratios, a widely followed market multiple, and the sustainable rate of growth.

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