The dividend growth model only holds if, at some point in time, the dividend growth rate exceeds the stock's required return.

Question

Quizplus · Accepted Answer

The dividend growth model actually requires the dividend growth rate to be less than the stock's required return for it to be valid, as it is based on the premise that dividends can grow indefinitely only at a rate that is sustainable and less than the required return on the investment.

The Dividend Growth Model Only Holds If, at Some Point