For example, if a company consistently paid out 50% of earnings as dividends, then the discounted dividends would be worth 50% of the discounted earnings. In either of the latter two, the value of a company is based on how much money is made by the company. The dividend discount model is closely related to both discounted earnings and discounted cashflow models. When dividends are assumed to grow at a constant rate, the variables are: P chosen see Sustainable growth rate § From a financial perspective

Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book ' The Theory of Investment Value,' which put forth the dividend discount model 18 years before Gordon and Shapiro. Gordon of the Massachusetts Institute of Technology, the University of Rochester, and the University of Toronto, who published it along with Eli Shapiro in 1956 and made reference to it in 1959. The constant-growth form of the DDM is sometimes referred to as the Gordon growth model ( GGM), after Myron J. Over 20 different categories ranging from Electronics, Home Appliances, Food & Groceries, Car Buying, Travel, Fitness, and more. In other words, DDM is used to value stocks based on the net present value of the future dividends. 1 EXCLUSIVE SAVINGS Employee Pricing Access to 30,000+ national & local employee discounts. In finance and investing, the dividend discount model ( DDM) is a method of valuing the price of a company's stock based on the fact that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.

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