Discounted Dividend Valuation

From the perspective of a shareholder who buys and holds a share of stock, the cash flows he or she will obtain are the dividends paid on it and the market price of the share when he or she sell it. The future selling price should in turn reflect expectations about dividends subsequent to the sale.

The discounted dividend approach is most suitable for dividend-paying stocks, where the company has a discernible dividend policy that has an understandable relationship to the company’s profitability, and the investor has a non-control (minority ownership) perspective.

• Expected Holding Period Return (DDM)
• Forecasting Dividends
• Gordon Growth Model
• Multiple Holding Periods DDM
• Single Holding Period DDM
• Sustainable Growth Rate (DDM)