Dividend Discount Model


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Dividend Discount Model (DDM)

A method to value the common stock of a company that is based on the present value of the expected future dividends.

Dividend Discount Model

An estimate of what the price per share of a stock or other security should be, based on the present value of future dividends. This estimate allows investors to determine whether the stock is undervalued or overvalued. If the model says the stock should cost more than it does, investors often buy it. Likewise, if the real cost is higher than the estimate, the investor is likely to sell or refrain from buying.

dividend discount model

A model used to determine the price at which a security should sell based on the discounted value of estimated future dividend payments. Dividend discount models are used to determine if a security is a good buy, such as one that sells at a lower current price than the model would indicate, or a bad buy, such as one that sells at a higher current price than the model would indicate.
References in periodicals archive ?
Dividend Discount Model is a procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value.
Using the constant growth dividend discount model, Evelyn computes an intrinsic value of $28.
In response to the demand for more flexibility when faced with higher growth companies, a number of variations on the dividend discount model were developed over time in practice.
4) Walter (1966) modified the dividend discount model as follows: P = D + ROE/[k.
Dividing both sides of the stable growth dividend discount model by the book value of equity, we can estimate the price/book value ratio for a stable growth firm.
William Hill remains highly dependent on the performance of its retail business, but the group is looking to increase earnings growth from its interactive betting and through international expansion we consider William Hill shares to be attractively valued and this view is supported by our Dividend Discount Model where the group ranks in the top quintile.
0 also has expanded country coverage and offers many new capabilities such as an Interactive Dividend Discount Model.
The shares are attractively valued, ranking in the second quintile on our Dividend Discount Model and offer good upside potential.
This view is supported by our Dividend Discount Model where Tate & Lyle ranks in the upper quintiles.
AB Foods shares look reasonably valued, in the second quintile of the global rankings on our Dividend Discount Model.
On the dividend discount model, Sky ranks top quintile globally and second quintile on a regional basis.