Chapter 9 — Stock Return Evaluation

Dividend growth model (Gordon), required return (CAPM), and valuation links.

FIN435 • Spring 2026 Theme

Links

Chapter 9 PPT Dividend Growth Model Calculator (jufinance.com/stock) Non-constant Dividend Growth (jufinance.com/dcf) WMT Dividend History (Nasdaq)

Note: This page provides links only. Each chapter has its own page.

For class discussion

What is the dividend growth model, and why do we use dividends to estimate a company’s true value?
Can we reliably predict future dividend payments?
Why do we require returns estimated based on risk factors to determine stock prices?

Key equations

Po = D1 / (r − g) = D0(1 + g) / (r − g) Dividend Yield = D1 / Po Capital Gain Yield = (P1 / Po) − 1 = g Total Return = Dividend Yield + Capital Gain Yield = D1 / Po + g Non-constant dividend growth: Pn = Dn+1 / (r − g) = Dn(1 + g) / (r − g) Po = NPV(r, D1, D2, …, Dn + Pn) Po = D1/(1+r) + D2/(1+r)^2 + … + (Dn + Pn)/(1+r)^n

Tip: If dividends are “infinite,” we simplify using a constant growth rate g and discount rate r.

Disclaimer: Materials are provided for educational use on jufinance.com.