The most common DDM is the Gordon growth model, which values stock entirely on expected future dividends. This section introduced common stock and some of the models and calculation methods used by investors and financial analysts to determine the prices or values of common shares.

The dividend discount model, or DDM, is a method used to value a stock based on the concept that its worth is the present value of all of its future dividends. Other techniques include the zero growth DDM, which depends on fixed dividends; the constant growth DDM, which assumes that dividends will grow at a constant rate; and the variable growth or nonconstant growth DDM…

Gordon growth model — a methodology used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. dividend — a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits or reserves. most common DDM — the Gordon growth model, which values stock entirely on expected future dividends. common stock — a security that represents partial ownership of a corporation.