Gordon growth model calculator
Enter the dividend per share, the required return and the expected dividend growth to see the fair price.
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Fair price
R$26.00
- Next dividend
- R$2.08
- Margin over current price
- 30.0%
Your result in words
With a dividend of R$2.00, a required return of 12% and growth of 4%, the Gordon fair price is R$26.00. With the stock at R$20.00, the margin is 30%.
Informational estimate, without fees or inflation. Check taxes and charges for your case; the real result may differ.
How it works
The Gordon model
The Gordon growth model values a stock as the present value of dividends growing forever at a constant rate. It works best for mature companies that pay stable dividends.
Sensitivity
The result is very sensitive to the gap between return and growth: when the two get close, the price skyrockets. Use realistic growth, below the growth of the economy, and test different values.
Formula
How to calculate
D with subscript 0 is the last dividend, D with subscript 1 the next one, g the growth, r the required return and V the fair price. The required return must be higher than the growth.
Example
With round numbers, so you can check the math:
With a dividend of R$2.00, a required return of 12% and growth of 4%, the Gordon fair price is R$26.00. With the stock at R$20.00, the margin is 30%.
Frequently asked questions
Why must the return be higher than growth?
Because if dividends grew as much as or more than the required return, the infinite sum would never stop growing and the model would give an infinite or negative price.
What growth should I use?
A conservative estimate, such as the average dividend growth of recent years or long-term inflation. Avoid very high values.
Does it work for companies that pay no dividends?
No. The model starts from dividends. Companies that do not pay need other valuation methods.
Math checked by the JuntaTudo team · updated on Nov 12, 2026
