Gordon Growth Model Calculator
Value a stock with the Gordon growth model from the dividend, required return, and growth rate.
What this calculator does
The Gordon Growth Model Calculator estimates your result instantly from the values you enter, using standard investing & wealth formulas. Value a stock with the Gordon growth model from the 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 Gordon Growth Model Calculator
The Gordon Growth Model Calculator estimates the intrinsic value of a share that pays a dividend growing at a constant rate forever. From the next annual dividend, the required rate of return, and the growth rate, it divides the dividend by the difference between the required return and the growth rate.
The Gordon Growth Model is the closed-form value of a perpetually growing cash stream, so the required return has to exceed the growth rate for the value to be finite. The calculator enforces that condition and applies the relationship directly to your inputs.
Enter the next annual dividend, the required return, and the growth rate, press Calculate, and read the intrinsic value per share.
Formula & Mathematical Calculation
Intrinsic Value per Share = Next Annual Dividend ÷ ( Required Return − Growth Rate )
Calculation Example
A share whose next annual dividend is $3.00, with a 9% required return and 4% growth, has an intrinsic value of $3.00 ÷ (0.09 − 0.04) = $60.00.
Key Benefits
- Estimates intrinsic value from a perpetually growing dividend at a constant rate.
- Applies the Gordon Growth closed-form relationship directly to your inputs.
- Requires the return to exceed the growth rate, keeping the value finite.
- 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 3. -
Enter the required return
Type your required rate of return as a percentage in the Required Return field, for example 9. -
Enter the growth rate
Type the constant dividend growth rate as a percentage in the Growth Rate field, for example 4. -
Press Calculate
The tool divides the dividend by the required return minus the growth rate to return the intrinsic 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
- Gordon Growth 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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