Talk:Dividend discount model

Requested move

 * The following discussion is an archived discussion of a requested move. Please do not modify it. Subsequent comments should be made in a new section on the talk page. No further edits should be made to this section. 

The result of the move request was: page moved. Vegaswikian (talk) 21:43, 20 October 2011 (UTC)

Dividend Discount Model → Dividend discount model –

Per WP:CAPS ("Wikipedia avoids unnecessary capitalization") and WP:TITLE, this is a generic, common term, not a propriety or commercial term, so the article title should be downcased. Lowercase will match the formatting of related article titles, including the "See also" Gordon model. Tony  (talk)  02:55, 14 October 2011 (UTC)
 * The above discussion is preserved as an archive of a requested move. Please do not modify it. Subsequent comments should be made in a new section on this talk page. No further edits should be made to this section.

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Don't understand sudden change in equation...
IN the beginning of the page you have the dividend express as D0(1+g). then suddenly in the section entitled "Income plus capital gains..." the equation changes to simply " D ". ???--Roxette5 (talk) 11:34, 26 October 2017 (UTC)

Wrong Derivation
You don't understand this model. There is no D0(1+g). The correct derivation:

P0 = D1/(1+r) + D1*(1+g)/(1+r)^2 + D1*(1+g)^2/(1+r)^3 + ... ,

where

P0 - the present intrinsic stock value (at t = 0)

D1 - a dividend in the next period (so at t = 1)

r - cost of equity

g - growth rate

D1/(1+r) + D1*(1+g)/(1+r)^2 + D1*(1+g)^2/(1+r)^3 + ... =

= 1/(1+r) [D1 + D1*(1+g)/(1+r) + D1*(1+g)^2/(1+r)^2 + ... ] =

= 1/(1+r) * A, where

A = D1 + D1*(1+g)/(1+r) + D1*(1+g)^2/(1+r)^2 + ...

We use Geometric series - Wikipedia so that for r < 1:

A = D1 / [1 - (1+g)/(1+r) ] = D1*(1+r) / (r - g)

Then we go back to P0:

P0 = 1/(1+r) * A = 1/(1+r) * D1*(1+r) / (r - g) = D1 / (r - g)

So you see that I don't use the present dividend and only start from t = 1 and D1. That means that Gordon's model is more flexible than you assume. Pawel.jamiolkowski (talk) 19:35, 10 June 2024 (UTC)


 * @Pawel.jamiolkowski Greetings! My comments:

1) The equations related to Gordon's constant growth DDM lack inline citations to reliable sources. 2) Related Methods has no inline citations to reliable sources. 3) Related Methods does not state that the DCF formula includes the expected sales price of the stock at the end of the holding period. Intrinsic value of a stock = PV of future dividends + expected sales price of stock at end of holding period. This is explained in the "Dividend Discount Models" section of the university textbook Essentials of Investments, so it belongs here too. I can handle #3. Cordially, BuzzWeiser196 (talk) 13:44, 21 July 2024 (UTC)

Everything except the lead lacks inline citations to a reliable source
Greetings Wikipedians! This violates Wikipedia's policy on verifiability, which states: "Even if you are sure something is true, it must be verifiable before you can add it....The burden to demonstrate verifiability lies with the editor who adds or restores material, and it is satisfied by providing an inline citation to a reliable source that directly supports the contribution." The lack of citations for all those equations is particularly troubling. Give us the sources! I'll let this rest for a while and hope someone will rectify this shortcoming. Cordially, BuzzWeiser196 (talk) 13:07, 14 July 2024 (UTC)