How it works
Model value = last dividend × (1+growth) / (required return − growth), with required return greater than growth.
Input definitions
- Last annual dividend per share
- Enter the value in the labeled unit.
- Constant dividend growth (%)
- Enter the value in the labeled unit.
- Required annual return (%)
- Enter the value in the labeled unit.
A worked example
- Last annual dividend per share
- 2
- Constant dividend growth (%)
- 3
- Required annual return (%)
- 8
Assumptions & limits
Planning model using the rates, cash flows and periods entered. Examples are illustrative, not market quotes or personalised financial advice. Taxes, inflation and transaction costs are excluded unless explicitly entered.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-18. Content checked against the stated method and examples. Our verification approach.
Common questions
Is the model value a price target?
No. It is highly sensitive to perpetual growth and required return assumptions and is unsuitable for many dividend patterns.
How does Gordon dividend growth valuation work?
Model value = last dividend × (1+growth) / (required return − growth), with required return greater than growth.
What should I check before using Gordon dividend growth valuation?
Planning model using the rates, cash flows and periods entered. Examples are illustrative, not market quotes or personalised financial advice. Taxes, inflation and transaction costs are excluded unless explicitly entered.