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Dividend Discount ModelKnowledge Center |
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What is the Dividend Discount Model? Meaning.The Dividend Discount Model is a valuation technique that estimates the price a stock will be trading by calculating the Net Present Value of all expected future dividend payments discounted by an appropriate risk-adjusted rate. Two well-known variants of this model are:
Both variants are very sensitive to the assumptions made regarding growth rates, time frame, and the required rate of return.
Compare with: Net Present Value | Discounted Cash Flow | Dividend Payout Ratio |
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Return to Management Hub: Decision-making & Valuation | Finance & Investing More on Management | Return to Management Dictionary |
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