Fair Value
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Upside / Downside
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Current Yield
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When Should You Use This?
Use this calculator to value stable, dividend-paying companies like blue chips, utilities, and REITs. The Gordon Growth Model works best for companies with a consistent dividend history and predictable growth rates.
How It Works
1
Enter Dividend
Input the current annual dividend per share. If you have quarterly dividends, multiply by 4.
2
Set Growth Rate
Enter the expected annual dividend growth rate. Look at the company's 5-10 year dividend growth history as a guide.
3
Read Fair Value
The fair value is what the stock is worth based on its future dividend stream. Compare it to the current market price.
Frequently Asked Questions
The Gordon Growth Model (GGM) values a stock as the next year's expected dividend divided by the difference between required return and dividend growth rate: P = D1 / (r - g).
Most equity investors use 8-12%. You can also use CAPM: Risk-free rate + Beta x Market risk premium. A higher required return means a lower fair value.
DDM doesn't work for companies that don't pay dividends, have unstable dividends, or when the growth rate exceeds the required return (formula breaks down).
Yes, DDM works well for REITs since they are required to distribute 90%+ of income as dividends, making future cash flows more predictable.
The S&P 500 average dividend growth is about 5-7% per year. Dividend aristocrats (25+ years of growth) typically grow dividends at 6-10% annually.