About
Gordon Growth (DDM): stock value = D1 / (r - g) where D1 = next dividend. Works only if r > g. Sensitive to inputs: 1% growth change = ~20-30% value change. Use for stable dividend payers (utilities, REITs, consumer staples). Not for growth/tech stocks.
Myron Gordon and Eli Shapiro derived the constant-growth form in 1956. The required return r is usually built from the Capital Asset Pricing Model: r = risk-free rate + beta * equity risk premium. With the 10-year US Treasury near 4.25% in mid-2026 and a 5% equity risk premium (Damodaran's running implied estimate), a beta-1.0 stock implies r ~= 9.25%. The long-run g cannot exceed nominal GDP growth (5-6% in nominal USD terms) or the math breaks: if g approaches r the denominator collapses and value approaches infinity, which is why the model demands r > g and breaks for hyper-growth names. For Coca-Cola in early 2026 (D0 ~= $2.04, g ~= 4%, r ~= 8.5%) the formula returns roughly $2.04 * 1.04 / (0.085 - 0.04) = $47, which sits in the same ballpark as the trading range and explains why DDM is a sanity check, not an oracle.
Formula
Frequently asked questions
How accurate is the DDM Calculator?
It applies the standard formula. Accuracy is limited only by your input precision. For decisions with material consequences (taxes, medical, legal, structural), use the result as a starting point and verify with a qualified professional in the relevant field.
Is the DDM Calculator free to use?
Yes. 100% free, no signup, no payment, no API key. The site is funded by display ads around the tool but not inside the calculation flow.
Are my inputs saved anywhere?
No. All inputs stay in your browser tab. Closing the tab discards them. The site uses Google Analytics for traffic measurement (anonymized) but the analytics never see what you type into the form.
Can I use the DDM Calculator on my phone?
Yes. The tool is responsive and tested on iOS Safari, Android Chrome, and major desktop browsers. Touch targets meet Apple's 44pt and Google's 48dp minimum.
Does the DDM Calculator work offline?
Yes. Once the page has loaded, it works without internet. The calculation runs in JavaScript on your device.
How do I report a bug or suggest improvement to the DDM Calculator?
Email hi@3tej.com with the URL of this page and a description of what you saw vs expected. We typically respond within 72 hours.
Can I share results from the DDM Calculator?
Take a screenshot or copy the output. The page doesn't generate shareable URLs for specific calculations - inputs stay in your browser only.
Why are the results different from another ddm tool?
Most likely: different formula assumptions, different default values, different rounding rules, or different applicable rates. Check the methodology if both tools document it. Both can be valid for different scenarios.
Is the DDM Calculator accurate?
The DDM Calculator applies the standard formula for ddm. Accuracy is limited only by your input precision. For decisions with material consequences, use the result as a starting point and verify with a qualified professional or the relevant official source.
Is the DDM Calculator free?
Yes. 100% free, no signup, no payment, no API key. The site is funded by display ads that appear around the tool but not inside the calculation flow.
Are my inputs saved?
No. Inputs stay in your browser tab. Closing the tab discards them. The site uses Google Analytics for traffic measurement (anonymized) but does not see what you type into the form.
What if r is less than or equal to g?
The single-stage Gordon model assumes perpetual constant growth slower than the discount rate. If r minus g is zero or negative, value goes to infinity, which never holds for a real firm. In those cases switch to a two- or three-stage DDM: project explicit dividends for the high-growth phase (5-10 years at g_high), then apply Gordon with a sustainable terminal g (capped at long-run GDP growth, around 4-5% nominal), and discount each piece back to today at r.
How do I pick the growth rate g for a real stock?
The cleanest anchor is the sustainable growth rate: g = retention ratio * ROE, where retention ratio = 1 - payout ratio. A REIT paying 90% of FFO with a 12% ROE implies g around 1.2%, consistent with low-single-digit dividend hikes. For mature dividend aristocrats, the 10-year compound annual dividend growth rate (reported in most broker terminals) is a defensible proxy. Cap any g at nominal GDP so the perpetuity stays mathematically sane.
How to use the DDM Calculator
The DDM Calculator is a browser-based tool that runs entirely on your device. Inputs you enter never reach a server - all calculations happen client-side in JavaScript. This means:
- Privacy: nothing is logged, sent, or stored by 3Tej. Inputs disappear when you close the tab.
- Speed: results update as you type. No network round trip.
- Offline use: once the page is cached, it works without internet.
- No signup: no account, no email, no rate limits.
Step by step
- Enter your inputs in the form above. Each field is labeled with its unit (currency, percent, kg, etc.) and the expected range.
- Read the result as it updates. The number reflects the formula commonly accepted in DDM-related calculations.
- Adjust to see sensitivity: change one input at a time and watch how the output moves. This is the fastest way to understand which variable matters most.
- Copy or screenshot the result for later reference. The page state persists for the session if your browser allows it.
When you would use this
- Quick estimates: when you need a number now and don't want to open a spreadsheet.
- Sensitivity analysis: testing how a result changes as inputs vary, before committing to a real-world decision.
- Comparison: running the same calculation with different inputs to compare options side by side.
- Learning: building intuition for how the underlying math behaves.
- Documentation: capturing a snapshot of inputs and outputs at a point in time.