Gordon Growth Model Calculator

Stock Valuation Using Gordon Growth Model

Input Fields

Expected Dividend Next Year (D₁)

D1

$

Enter the expected dividend for next year

Required Rate of Return (r)

r

%

Enter the required rate of return

Growth Rate (g)

g

%

Enter the constant growth rate of dividends

CalculateReset

Calculate automaticallyIf enabled, the result will update automatically when you change any value.

Your Results

Estimated Stock Price

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Gordon Growth Model Formula

$$\text{Stock Price} = \frac{D_1}{r – g}$$

Where:

• $$D₁$$ = Expected dividend in the next period
• $$r$$ = Required rate of return (as decimal)
• $$g$$ = Dividend growth rate (as decimal)
• $$Stock Price$$ = Estimated fair stock price

The Gordon Growth Model (also known as the Dividend Discount Model) is a simple and widely used valuation method for estimating a stock’s fair value based on future dividends that grow at a constant rate. It’s especially useful for valuing stable, dividend-paying companies.