Dividend discount model, DDM ((See Chapters 19, 32 and 38 of the Vernimmen))

The dividend discount model is based on the assumption that the value of a company is determined by the stream of dividends the investor expects to receive over a period of time. This model is one of the fundamental valuation methods. The dividends are discounted at the cost of equity. The DDM model gives the intrinsic value (called intrinsic value – share) of the company.