dividend discount model

The Dividend Discount Model (DDM) is a method used to value a company's stock based on the idea that its worth is the total of all future dividends it is expected to pay, discounted back to their present value. Essentially, it calculates how much those future payments are worth today. If a company pays regular dividends, the DDM helps investors estimate if the stock is fairly priced compared to its dividend payouts. It’s particularly useful for stable companies that consistently return profits to shareholders through dividends.