# Definitions for dividend discount modeldiv·i·dend dis·count mod·el

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1. Dividend discount model

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value. In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model (GGM). It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959. Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value." The variables are: P {\displaystyle P} is the current stock price. g {\displaystyle g} is the constant growth rate in perpetuity expected for the dividends. r {\displaystyle r} is the constant cost of equity capital for that company. D 1 {\displaystyle D_{1}} is the value of the next year's dividends. P = D 1 r − g {\displaystyle P={\frac {D_{1}}{r-g}}}

### Numerology

1. Chaldean Numerology

The numerical value of dividend discount model in Chaldean Numerology is: 5

2. Pythagorean Numerology

The numerical value of dividend discount model in Pythagorean Numerology is: 9

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"dividend discount model." Definitions.net. STANDS4 LLC, 2022. Web. 18 Jan. 2022. <https://www.definitions.net/definition/dividend+discount+model>.

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