Gordon (Constant) Growth Dividend Discount Model

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The Gordon Growth Model (GGM) is a variation of the standard discount model. The key difference is that the GGM model assumes the dividends will grow at a constant rate till perpetuity.

If the current year’s dividends are D0, and the dividend growth rate is gc, the next year’s dividend D1 will be D0 = (1+gc). D2 will be D0(1+gc)^2 and so on.

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