How the Dividend Discount Model Works The reason I like using the DDM for my work is because the formula is simple and effective. The purpose of this model is giving a value for future dividend ...

Reviewed by Margaret James The dividend discount model (DDM) is one of the basic applications of financial theory. The theory is easy to grasp: A stock is worth its price if that price is less ...

The Dividend Discount Model is a valuation formula used to find the fair value of a dividend stock.

The dividend discount model builds from this to argue that the value of a stock should therefore be the present value of all its expected dividends over time.