Valuation

Dividend Discount Model

Definition

What is Dividend Discount Model?

A model valuing equity as the present value of expected future dividends.

Example in practice

A mature utility is valued using forecast dividends and a required return.

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The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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