Gordon Growth Model

The Gordon Growth Model, also known as the Dividend Discount Model, is a method used to determine the value of a company's stock based on its future dividend payments. It assumes that dividends will grow at a steady rate indefinitely. By estimating the expected dividends, their growth rate, and a required rate of return, the model calculates the present value of these future cash flows. Essentially, it helps investors assess whether a stock is fairly priced based on its ability to generate income through dividends over time.