dividend discount model

dividend discount model definition - finance
A technique that estimates the price that a stock should be trading at by calculating the present value of all future dividends. The model assumes that dividends will grow at a constant rate and that growth will continue for an infinite period. It also assumes that the required rate of return is greater than the infinite growth rate.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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