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+--- Thread: dividend discount model (/showthread.php?tid=831)
dividend discount model - Joey Batz - 01-15-2015
Does anybody know of a good calculator for the Dividend Discount Model, or at least something that clearly explains what numbers to plug in and how it works? Even the "simple, easy to understand" explanations of the DDM are a convoluted, nonsensical mess of random numbers that have nothing to do with what's actually being explained.
Does anybody actually use the DDM for valuation purposes? Or is Dividend Growth Investor's rule of investing in companies with a P/E of 20 or less a better system? I've been using that method myself, but I really want to supercharge my dividend income in the new year.
RE: dividend discount model - ChadR - 01-15-2015
I don't use the DDM method for investing. I'm more along the lines of Dividend Growth Investor's rule of a P/E under 20.
RE: dividend discount model - earthtodan - 01-15-2015
If I understand correctly, DDM only values the dividend and doesn't value growth. As a total return investor I pretty much ignore it.
RE: dividend discount model - daat99 - 01-18-2015
I also ignore the DDM.
I prefer combining the P/E under 20 rule with the "yield above average" where I try to buy stocks with current yield higher than their 5 year average yield (and still below 10%).
When combined with increased dividends and strong financial background this tells me that the company is cheaper than it usually is.