Zero Growth Dividend Valuation Model Calculator
Zero growth dividend valuation model is a crucial tool for investors to determine the intrinsic value of a stock that pays a dividend but is not expected to grow. It’s vital for making informed investment decisions.
- Enter the dividend per share.
- Enter the risk-free rate.
- Enter the beta of the stock.
- Enter the market return.
- Click ‘Calculate’.
The formula used is: Intrinsic Value = Dividend per Share / (Risk-Free Rate – Growth Rate). The growth rate is calculated as (Market Return – Risk-Free Rate) * Beta.
| Company | Dividend per Share | Risk-Free Rate | Beta | Market Return | Intrinsic Value |
|---|---|---|---|---|---|
| ABC Corp | $2.50 | 2.5% | 1.2 | 7% | $33.33 |
| Stock | Current Price | Intrinsic Value | Undervalued? |
|---|---|---|---|
| XYZ Inc | $50.00 | $60.00 | Yes |
- Consider using the Gordon Growth Model for growing dividends.
- Always compare the intrinsic value with the current market price.
- Beware of high beta stocks, as they are more volatile.
What is beta?
Beta is a measure of a stock’s volatility compared to the market.