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Constant Growth Dividend Share Value

Estimate a constant-growth dividend share value with retention-based growth and a CAPM cost-of-equity scenario.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

A dividend of 2, payout of 50% and return on equity of 8% imply 4% growth and a next dividend of 2.08. With a 12% cost of equity, modeled value is 26.

g = (100 − payout) × ROE/100; k = risk-free + beta × premium; value = next dividend × 100/(k − g).

Worked example

Enter these known values and leave the other values blank.

Dividend per share
2 USD
Dividend payout ratio
50 %
Return on equity
8 %
Risk-free rate
4 %
Beta
2
Market risk premium
4 %
Expected growth rate
4 %
Expected dividend
2.08 USD
Cost of equity
12 %
Stock value
26 USD

Assumptions and limitations

  • Rates are percentage points. The required return must exceed perpetual growth for a finite economically meaningful value.
  • Assumes a stable dividend-paying business, constant payout and long-run growth. A perpetual-growth scenario is highly sensitive to its assumptions.
  • Amounts use a single consistent currency. Currency selector conversion factors are a captured static snapshot; they are not current FX quotes.
  • Clear the unknown field before solving an inverse. Locks keep known values fixed; contradictory locked values require correction.
  • Domain review limits calculations to the documented finite scenario; original captured equations, inverses and unit options are retained.

Common questions

How should I interpret the example?

A dividend of 2, payout of 50% and return on equity of 8% imply 4% growth and a next dividend of 2.08. With a 12% cost of equity, modeled value is 26.

References

Require the documented finite model domain. Cost of equity must exceed perpetual growth. Dividend payout must be between zero and 100 percentage points.

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