Dividend growth model

Definition:

An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equals next year's dividends divided by the difference between the required rate of return and the assumed constant growth rate in dividends.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Equalizing dividend

Special dividends received by investors of a firm for income the investor lost because the firm altered the dividends payment schedule.

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