What this calculator does
Dividend discount model (Gordon growth) works out values a stock as its dividends, discounted and growing forever. Enter your own figures above and the answer updates as you type: nothing is fixed in the code, so the result reflects exactly the numbers you supply.
The formula this calculator evaluates is printed under the tool and explained below, so you can check the working by hand or reuse it in a spreadsheet.
The formula
FormulaValue = D1 / (r − g) where D1 is next year’s expected dividend
The inputs explained
| Field | What to enter |
|---|---|
| Expected dividend next year ($) | A number, measured in your currency. Starts at 2.2. |
| Required return (cost of equity) (%) | A number, measured in %. Starts at 9. |
| Expected dividend growth rate (%) | A number, measured in %. Starts at 4. |
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the answer changes with expected dividend next year
Every other input is held at the calculator’s starting values while expected dividend next year varies. Select any row to load that scenario into the calculator.