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Dividend Discount Model (DDM)

Learn about how to use the DDM valuation method

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Written by Support
Updated over a year ago

How To Use the Calculator

Enter the Current Share Price, Annual Dividend Per Share, Expected future dividend growth rate, Total Years to Simulate, and discount rate. Click the "Calculate" button. The output will show below.

This includes the Intrinsic Value and the percentage Undervalued/Overvalued. That percentage is based on the difference between the current price and calculated intrinsic value.

Formula Explained

PV = Present Value of Future Dividends ($)

D = Annual Dividend Per Share ($)

g = Reasonable Annual Growth Rate of Dividend

n = The Number of Years Simulated in the Model

k = Discount Rate (US Treasury Bonds, AAA Corporate Bonds, WACC, S&P 500 Return, etc)

​Warning

Make sure to invest with a strong margin of safety. Inputs need to be realistic and may prove to be inaccurate (Garbage In/Garbage Out).
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Video Explanation

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