The constant-growth dividend model tells us that the current price of a share of stock is the next period dividend divided by the difference between the discount rate and the dividend growth rate.

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The constant-growth dividend model, also known as the Gordon Growth Model, calculates the current price of a stock as the next period's expected dividend divided by the difference between the discount rate (required rate of return) and the dividend growth rate.

The Constant-Growth Dividend Model Tells Us That the Current Price