FairValueToolkit
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DDMMyron J. Gordon (1956) / Fuller & Hsia (1984)

DDM (Dividend Discount Model - Gordon & H-Model) Calculator

DDM values common stock based on the present value of all expected future cash dividends, making it the industry standard for dividend-paying blue chips and financial institutions.

Calculator Inputs
Cash Dividend Paid Per Share

Find inputs with free data (Finviz)

Find the values below on the Finviz quote page and enter them in the calculator.

Open Finviz quote page
Calculator inputWhere on Finviz
DPS (D0)Snapshot > Dividend TTM
Cost of equity keYour assumption (e.g., 8.5%)
Growth gSnapshot > Dividend Gr. 3/5Y
Current priceSnapshot table > Price
Snapshot — ① Dividend TTM ② Dividend Gr. 3/5Y ③ current price
Snapshot — ① Dividend TTM ② Dividend Gr. 3/5Y ③ current price

Financial statement figures are under the Income Statement / Balance Sheet / Cash Flow tabs above the snapshot table; set Timeframe to Annual. Click an image to enlarge.

Theoretical Foundation & Equation

The Gordon Growth Model assumes constant perpetual dividend growth (g). The Fuller-Hsia H-Model provides higher realism by modeling an initial high growth rate (gS) that linearly transitions to long-term growth (gL) over a half-life period (H).

Core Intrinsic Formula
Gordon = D0 × (1 + g) / (ke - g) | H-Model = [D0 × (1 + gL) / (ke - gL)] + [D0 × H × (gS - gL) / (ke - gL)]
Variable Definitions & Disclosure Guidance
SymbolVariable NameDescriptionFiling Source Guide
D_0Current Dividend Per ShareTrailing Twelve Months cash dividend per shareCash Flow Statement: Dividends Paid / Shares
k_eCost of EquityRequired rate of return for equity holders (must strictly exceed growth rate)CAPM or long-term hurdle rate (8-10%)
g / g_LSustainable Long-Term GrowthPerpetual stable dividend growth rate aligned with GDP growth (2-4%)Long-term economic outlook
g_S / HInitial Growth & Half-Life (H-Model)Initial short-term growth rate (gS) and half of total transition duration (H years)Medium-term corporate payout expansion plan
Financial Intuition: From a cash-in-hand perspective, equity is worth exactly what it returns to shareholders over time via dividends.

Step-by-Step Worked Example

Fuller & Hsia Benchmark Financial Corp.

Stable financial holding company with expanding shareholder distributions.

Sample Financial Filing Inputs
Dividend Per Share (D0)
$2.00
TTM Dividend
Cost of Equity (ke)
9.0%
Required Return
Long-Term Growth (gL)
4.0%
Perpetual Growth
Initial Growth (gS) / Half-Life (H)
10.0% / 5 Years
H-Model Transition
Calculation Steps
Step 1: Gordon Constant Growth Valuation$41.60
$2.00 × (1 + 0.04) / (0.09 - 0.04) = $2.08 / 0.05 = $41.60
Step 2: H-Model Linear Transition Valuation$53.60
Base $41.60 + [$2.00 × 5 × (0.10 - 0.04) / (0.09 - 0.04)] = $41.60 + $12.00 = $53.60
Example Conclusion & Interpretation

Gordon perpetual growth implies $41.60 fair value, while H-Model incorporating near-term dividend expansion yields $53.60.

Suitability Checklist & Limitations

Best Suited For
  • •Commercial banks, insurance carriers, financial holding companies, REITs, and regulated utilities
  • •Dividend Aristocrats with decades of consistent payout records
Not Suitable For
  • •Non-dividend paying tech stocks or early-stage growth companies reinvesting 100% of profits
  • •Aggressive high-yielders paying out dividends in excess of earnings (dividend-cut risk)

Frequently Asked Questions

Financial institutions use debt and deposits as operational raw materials, rendering standard FCFF / WACC undefined. Dividends represent pure distributable cash flow to equity owners.
Primary Citations & Source Documentation
Myron J. Gordon / Fuller & Hsia (1984)

Dividends, Earnings, and Stock Prices (1959) / A Simplified Common Stock Valuation Model (1984, CFA Institute)

View Source / Filing Reference
Legal Caveat
  • Avoid using non-recurring special dividends as base D0.