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Gordon Growth Model

A formula to calculate the constant dividend supported growth rate of mature companies with a low beta and low growth rate. The model operates on the assumption that dividends will increase infinitely and will outpace the stock price's growth, and is only an idealized calculation for select large-cap companies in stable sectors.D = Dividend per share forecast for next year; R = Required rate of return for the investor; G = Growth rate in dividends. Stock Value = D / (R - G)

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