Dividend Discount Model Calculator (DDM)

Use our Dividend Discount Model Calculator to estimate what a share is worth from the dividends it will pay — every future dividend, discounted back to today at the return you require.

With constant growth (the Gordon growth model), the value is next year’s dividend divided by the required return minus the growth rate: a $1.10 dividend growing 4% a year at a 9% required return is worth $22.00. With two-stage growth, the dividend grows faster for a few years before settling to a steady rate.

Add the market price to see the margin of safety, whether the share looks undervalued or overvalued, its dividend yield and the yearly return that price implies — and choose a margin of safety to see the most to pay per share.

The model suits steady dividend payers, and small changes to the growth and required return move the result a lot, so treat it as an estimate. To value a company from its free cash flow instead, use our Intrinsic Value Calculator (DCF).