Calculator
Dividend discount model calculator
Value of a dividend that grows at a steady rate, discounted at the return you require. Type your own numbers; nothing is sent anywhere.
The formula
Value per share = D₁ ÷ (r − g), where D₁ = D₀ × (1 + g)
A worked example
D₀ = $2.00, g = 4%, r = 9%: D₁ = $2.08 and the value is 2.08 ÷ 0.05 = $41.60.
How to read it
The Gordon growth form of the dividend discount model values a share as the present value of dividends that grow forever. It only suits companies with stable dividends, it is very sensitive to the gap between r and g, and it says nothing about firms that pay none.
Educational, not investment advice. The result is arithmetic on the inputs you typed.
Using real company figures
Company pages show the EPS, book value per share and free cash flow per share from each company's latest annual report to the SEC, which you can copy into this calculator. Browse 487 companies or start the worksheet with a company.
Questions
What if the company pays no dividend?
The model gives zero or does not apply. Use the DCF calculator with free cash flow instead.
Why must r be above g?
A steady growth rate at or above the required return makes the sum infinite.
Other calculators
- Graham numberThe square root of 22.5 times earnings per share times book value per share.
- Discounted cash flowPresent value of future free cash flow per share, using growth and discount rates you choose.
- P/E ratioPrice divided by earnings per share, and its inverse, the earnings yield.
- Book value per shareShareholders' equity divided by shares, and the price-to-book ratio if you add a price.
- PEG ratioP/E divided by an expected annual earnings growth rate you enter.
- Free cash flow yieldFree cash flow per share as a percentage of a price you enter.
- Return on equityNet income divided by shareholders' equity.