Dividend Discount Model Calculator

Work out dividend discount model instantly with clear inputs, formula shown and shareable results.

About Dividend Discount Model Calculator

The Gordon growth model values a share as next year's dividend divided by the gap between required return and dividend growth. The result is extremely sensitive to that gap, so the model suits stable, reliably dividend-paying businesses only.

Formula

Gordon growth model

P₀ = D₀(1+g) / (r - g)

D0: Current dividend
g: Growth
r: Required return

Worked example

With the default values below, Dividend Discount Model Calculator returns Value Per Share of $642.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Current Annual Dividend Per Shareminimum 0: 30
Dividend Growth Rateaccepts 0–25 %: 7 %
Required Returnaccepts 1–40 %: 12 %

Results

Value Per Share: $642.00
Next Year's Dividend: $32.100
Implied Dividend Yield: 5.000%
Required Return Minus Growth: 5.000%

Step by step

1Values used
2Gordon growth model
3Value Per Share= 642.00
4Next Year's Dividend= 32.100
5Implied Dividend Yield= 5.000
6Required Return Minus Growth= 5.000

Assumptions and limits

The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.

Frequently Asked Questions

What if growth exceeds the required return?

The formula breaks down. No company can grow faster than its cost of equity for ever, so use a multi-stage model.

Why is the model so sensitive?

The denominator is a small difference between two estimates, so a half-point change in either moves the value sharply.