Dividend Discount Model DDM
Valuing a stock as the present value of all the dividends it is expected to pay.
What it is
The dividend discount model values a share by forecasting its future dividends and discounting them to today at the cost of equity. The simplest version, the Gordon Growth Model, assumes dividends grow at a constant rate forever. It works best for mature, stable companies that pay steady, predictable dividends.
Why it matters
For dividend-focused investors and steady payers like utilities, banks, and consumer staples, the DDM is a clean, intuitive way to estimate intrinsic value. Its main limitation is that it is useless for companies that pay no dividend and unreliable for those with erratic payouts.
How it's calculated
In the constant-growth (Gordon) form, divide next year's expected dividend by the cost of equity minus the dividend growth rate. The growth rate must be below the cost of equity for the formula to work. Multi-stage versions handle changing growth by forecasting dividends year by year before applying the terminal formula.
How Quintarthai uses it
Dividend history and payout trends to anchor a DDM growth assumption are shown on each company's deep-analysis page under the key-metrics grid and Financials tab.