Dividend Discount Model Calculator

About this calculator

This calculator applies the Gordon Growth Model (a single-stage dividend discount model) to estimate a stock's intrinsic fair value: P = D₁ / (r − g), where D₁ is the expected dividend next year, r is the required rate of return (discount rate), and g is the constant expected long-term dividend growth rate. It assumes dividends grow at a fixed rate forever, discounting that infinite stream back to present value as a geometric series.

This is one of the oldest and most widely taught equity valuation methods, best suited to mature, stable dividend-paying companies like utilities and consumer staples where growth is predictable — it breaks down for non-dividend-paying growth stocks or when g approaches or exceeds r.

Equity analysts and value investors estimating whether a dividend stock is over- or under-priced, finance students learning valuation theory, and portfolio managers screening income-focused stocks all use the DDM, entering the expected dividend, discount rate, and growth rate.