A dividend stock is worth the stream of dividends it will pay. The Gordon growth model prices it in one elegant — and dangerously sensitive — formula.
Dividend Discount (Gordon)Live
valuing a dividend stock
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The Gordon growth model prices a stock as P = D₁/(r − g): next year's dividend divided by the gap between your required return and the dividend growth rate. As growth nears the discount rate the value shoots up — which is why the model is so sensitive. Educational tool, not financial advice.
Reading this result: Fair value P = D₁/(r − g) = $40.00 rests on a 5.00-point gap; note the 5.0% yield plus 4% growth recovers your 9% required return.
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How it works
The Gordon growth (dividend discount) model values a share as P = D₁/(r − g): next year's dividend divided by the spread between required return and dividend growth. Because the denominator shrinks as growth nears the discount rate, the valuation is extremely sensitive to those inputs. Educational tool, not financial advice.
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The solver uses established numerical methods, but results are for research and educational purposes and should be validated against experiment or professional review before you rely on them.