Dividend Discount Model Calculator
Estimate a stock's fair value from its dividend, growth rate, and required return using the Gordon Growth Model.
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How to use this tool
- Enter the current annual dividend per share.
- Enter the growth rate you expect the dividend to sustain long-term.
- Enter your required rate of return (must be higher than the growth rate) to see the estimated fair value.
The Dividend Discount Model (Gordon Growth Model) estimates a stock's fair value as its next expected dividend divided by the gap between your required return and the dividend's growth rate. It's a quick sanity check for dividend-paying stocks, not a substitute for full fundamental analysis.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Frequently asked questions
- What happens if the growth rate is higher than the required return?
- The formula breaks down (it would imply an infinite or negative price) — the Gordon Growth Model only works when your required return is greater than the assumed perpetual growth rate.
- Is this model accurate for all stocks?
- It works best for stable, mature, dividend-paying companies with a consistent payout history. It's a poor fit for non-dividend payers or companies with volatile, unpredictable dividend growth.