Using the Dividend Discount Model to calculate the stock price in the American stock market

Qianyu Han ()
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Qianyu Han: High School Attached to Northeast Normal University

A chapter in Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024), 2025, pp 412-417 from Springer

Abstract: Abstract Nowadays, more investors are trying to invest in different companies or projects to generate more profit. Thus, a method to evaluate stocks becomes necessary for investors. A method has been created to help investors always successfully invest by predicting the stock price by paying each company’s dividend, a calculating model called the Dividend Discount Model. This research mainly investigates whether the Dividend Discount Model is suitable for use in the American stock market. This paper uses two American companies as examples to analyse. The researcher is asked to identify the influencing factors, such as dividends, growth, and discounts. The calculated stock value is compared with the real stock value to determine the accuracy of this model. After the experiment, the researcher found out that the dividends of each company stay in an increasing trend, so the Dividend Discount Model can assume the stock price correctly, which helps people to finish more successful investments.

Keywords: Business investment; Stock price; Dividend Discount Model; American stock market (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-652-9_43

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DOI: 10.2991/978-94-6463-652-9_43

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