Dividend Discount Model Calculator
Value a stock with the dividend discount model from the next dividend, required return, and growth rate.
What this calculator does
The Dividend Discount Model Calculator estimates your result instantly from the values you enter, using standard investing & wealth formulas. Value a stock with the dividend discount model from the next dividend, required return, and growth rate. Calculations run in your browser, so nothing you type is sent to a server, and the output is an estimate for planning rather than financial advice.
Result
About Dividend Discount Model Calculator
The Dividend Discount Model Calculator estimates the fair value of a share from its expected dividends using the constant-growth (Gordon) form of the model. From the next annual dividend, the required rate of return, and the dividend growth rate, it divides the dividend by the difference between the required return and the growth rate.
The model treats a stock as the present value of a perpetually growing dividend stream, so the required return must be greater than the growth rate for the value to be finite. The calculator applies that relationship directly and stops if the inputs would break it.
Enter the next annual dividend, the required return, and the dividend growth rate, press Calculate, and read the fair value per share.
Formula & Mathematical Calculation
Fair Value per Share = Next Annual Dividend ÷ ( Required Return − Dividend Growth Rate )
Calculation Example
A stock whose next annual dividend is $2.00, with a 8% required return and 3% dividend growth, has a fair value of $2.00 ÷ (0.08 − 0.03) = $40.00 per share.
Key Benefits
- Estimates a share's fair value from its expected growing dividend stream.
- Applies the constant-growth dividend discount (Gordon) relationship directly.
- Requires the return to exceed the growth rate, guarding an infinite value.
- Uses only the dividend, required return, and growth rate you enter.
How to Use this Calculator
-
Enter the next annual dividend
Type the expected next-year dividend per share in the Next Annual Dividend field, for example 2. -
Enter the required return
Type your required rate of return as a percentage in the Required Return field, for example 8. -
Enter the dividend growth rate
Type the expected constant dividend growth rate as a percentage in the Dividend Growth Rate field, for example 3. -
Press Calculate
The tool divides the dividend by the required return minus the growth rate to return the fair value per share.
Assumptions & Limitations
What the calculation assumes
- Every value you enter is treated as an exact, known amount.
- Rates and contributions are assumed to stay constant for the whole period unless the form asks for them separately.
- Results use standard financial formulas and ignore fees, penalties and promotional terms that are not entered above.
- Inflation, tax changes and market volatility are not modelled unless a field for them is provided.
- Amounts are unit-agnostic: results are returned in the same currency you enter.
What it does not cover
- Dividend Discount Model Calculator produces estimates for education and planning, not a quote, offer or professional advice.
- Real-world outcomes differ when fees, taxes, rounding rules or provider-specific terms apply.
- Local regulations and tax rules vary by country and change over time; verify current rules for your jurisdiction.
- Figures are only as accurate as the inputs you supply — check them before acting on the result.
- For decisions with lasting financial impact, confirm the numbers with a qualified professional.
Frequently Asked Questions
Free to use, no account needed. Calculations run in your browser, so nothing you type is sent to a server. Results are estimates — how we build and check our calculators.
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