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 ?
Find the value estimate using the two-stage Dividend Discount Model.
Some evidence on the value of dividend discount models.
We believe the dividend discount model is an especially useful tool for evaluating REIT investments since the model focuses on dividends and the actual cash investors can expect to receive.
The stock ranks in the second quintile of our Dividend Discount Model on both a global and regional basis.
According to the dividend discount model (DDM), the intrinsic value of a stock ([P.
The proxy for stocks is a dividend discount model that derives the expected return for the stock market from the stocks' estimated future dividend flow and from the current level of stock prices as reflected by the S&P 500.
The stock ranks in the top quintiles of our Dividend Discount Model on both a global and regional basis.
Consensus Earnings Surprise Model (the growth or "Surprise" component) and our Dividend Discount Model (the value or "Alpha" component)," said Subramanian.