{"id":14909,"date":"2019-08-12T06:53:36","date_gmt":"2019-08-12T05:53:36","guid":{"rendered":"https:\/\/traders-paradise.com\/?p=14909"},"modified":"2020-03-25T13:48:03","modified_gmt":"2020-03-25T13:48:03","slug":"gordon-growth-model-mathematics-of-trading","status":"publish","type":"post","link":"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/","title":{"rendered":"Gordon Growth Model &#8211; Mathematics of Trading"},"content":{"rendered":"<p style=\"text-align: right;\"><em>5 min read<\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-14910 size-chainpress-thumb-big\" src=\"https:\/\/traders-paradise.com\/magazine\/wp-content\/uploads\/2019\/08\/Gordon-1-1-800x475.jpg\" alt=\"Gordon Growth Model\" width=\"800\" height=\"475\" \/><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_74 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#by_Gorica_Gligorijevic\" >by Gorica Gligorijevic<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#Lets_view_this_complex_definition_in_a_simple_example\" >Let&#8217;s view this complex definition in a simple example.<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#Lets_see_Gordon_Growth_Model_and_how_to_calculate_it\" >Let&#8217;s see Gordon Growth Model and how to calculate it.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#Stocks_value_D1_k_%E2%80%93_g\" >Stock\u2019s value = D1 \/ (k &#8211; g)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#200020-010_20\" >$2.00\/(0.20-0.10) = $20<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#You_will_very_often_find_the_Gordon_Growth_Model_formula_calculated\" >You will very often find the Gordon Growth Model formula calculated:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#P_D1r-g\" >P = D1\/(r-g)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#Following_the_inputs_for_our_example_Gordon_Growth_Model_formula_shows\" >Following the inputs for our example Gordon Growth Model formula shows:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#Lets_calculate_the_fair_dividends_for_those_years_we_already_find_the_dividend_growth_rate\" >Let&#8217;s calculate the fair dividends for those years (we already find the dividend growth rate):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#D5_340_110_374\" >D5 = $3.40 * 1.10 = $3.74\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#37402-01_3740\" >$3.74\/(0.2-0.1) = $37.40<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#37401105_2322\" >$37.40\/(1.10)^5 = $23.22<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#1671581591642322297\" >1.67+1.58+1.59+1.64+23.22=$29.7<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#So_can_the_Gordon_Growth_Models_formula_predict_the_future_market_returns_In_short_yes\" >So, can the Gordon Growth Model\u2019s formula predict the future market returns? In short, yes.\u00a0<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#But_the_weakness_of_the_Gordon_growth_model_is_its_hypothesis_that_there_will_be_a_constant_growth_in_dividends_which_is_rare_So_you_can_use_this_formula_for_companies_with_stable_growth_rates\" >But the weakness of the Gordon growth model is its hypothesis that there will be a constant growth in dividends which is rare. So, you can use this formula for companies with stable growth rates.<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h6 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"by_Gorica_Gligorijevic\"><\/span><em>by Gorica Gligorijevic<\/em><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p style=\"text-align: justify;\">The Gordon Growth Model is useful to determine the intrinsic value of a stock and you will see how. It is all math.<br \/>\n<span style=\"font-weight: 400;\">Anyone who wants to be a profitable trader has to <a href=\"https:\/\/en.wikipedia.org\/wiki\/Dividend_discount_model\">know math<\/a>. <\/span><span style=\"font-weight: 400;\">Profitable trading is not about feelings, or prophecy and stock advice or picks. It is all about math. Yes, the main goal is to earn money more than lose.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">But trading guessing is not a good idea. The math generates success and luck in your trading. Do you want to know how the math works in your attempts to profit and be a successful trader?<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">If you want to act like a pro you have to be able to explain and make the math behind your trading. Anyway, you might benefit from understanding the math behind the stock market.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">At least, you have to know the basic calculations.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/traders-paradise.com\/\">Traders-paradise<\/a> wants to show you some simple to understand. It will help you to pick the right stock and keep your hopes of future returns more realistic.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Let&#8217;s first determine the intrinsic value of stocks. How to do that? Just use of the Gordon Growth Model. Oh, yes. You will need more explanation.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The Gordon Growth Model is known as the dividend discount model or DDM but without the current market stipulations, meaning <\/span><span style=\"font-weight: 400;\">the <a href=\"https:\/\/traders-paradise.com\/category\/personal-finance-secrets\/\">factors<\/a> that influence the market, such as competitors, business challenges, etc.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The point of this Gordon Growth model is to relate the current intrinsic value of stocks to the value of a stock&#8217;s future dividends. <\/span><span style=\"font-weight: 400;\">This is a very old model but still actual and popular. <\/span><span style=\"font-weight: 400;\">The equation shows that the long-term real return from the market should be almost equal to the inflation, modified by the compound yearly growth rate in dividends and increased by the current dividend yield.\u00a0<\/span><\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Lets_view_this_complex_definition_in_a_simple_example\"><\/span><span style=\"font-weight: 400;\">Let&#8217;s view this complex definition in a simple example.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The S&amp;P 500 real growth rate in dividends has been around 1.3% per year over almost a hundred years. At the same period, the dividend yield was 5% annual. What you have to do is to sum these both. The sum you get is a bit less than actual 6,5% compound annual return from stocks for that period.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">This is defined by an almost doubling of the PE ratio, called a speculative return. That was exactly what did add the stock returns.<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Lets_see_Gordon_Growth_Model_and_how_to_calculate_it\"><\/span><span style=\"font-weight: 400;\">Let&#8217;s see Gordon Growth Model and how to calculate it.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">As we said the value of a stock is shown as\u00a0<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Stocks_value_D1_k_%E2%80%93_g\"><\/span><b>Stock\u2019s value = D1 \/ (k &#8211; g)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">where <\/span><b>D1<\/b><span style=\"font-weight: 400;\"> represents the expected annual dividend per share for the next year <\/span><b>k<\/b><span style=\"font-weight: 400;\"> is the investor&#8217;s discount rate of return. You can estimate this using the Capital Asset Pricing Model, for example.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">and <\/span><b>g<\/b><span style=\"font-weight: 400;\"> is the anticipated dividend growth rate. We take this as a constant.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">When you have all these parameters, it is so easy to calculate the intrinsic value of the stock. For example, the S&amp;P 500 dividend yield is about 2 %, 4.5% is how much you can expect dividends to grow due to the historical performances. So you can expect a long-run return at 6.5%.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">To show you how this model is true whether or not a company pays a dividend or reinvests it let&#8217;s show you this real example.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Suppose your preferred company plans to pay a $2 dividend per share next year (D1). Also, you expect an increase of 10% per year following (g). Also, suppose you are expecting a rate of return on the stock to be 20% (k). Let&#8217;s say, the stock is trading at $20 per share now. Using the Gordon Growth formula, you can determine that the intrinsic value of one share of the stock is:<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"200020-010_20\"><\/span><strong>$2.00\/(0.20-0.10) = $20<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">When you have all these parameters, it is so easy to calculate the intrinsic value of the stock.\u00a0<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"You_will_very_often_find_the_Gordon_Growth_Model_formula_calculated\"><\/span><span style=\"font-weight: 400;\">You will very often find the Gordon Growth Model formula calculated:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h4><span class=\"ez-toc-section\" id=\"P_D1r-g\"><\/span><strong>P = D1\/(r-g)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The stock price (P) is equal to the anticipated value of the dividend (D1) divided by the difference in the investor&#8217;s rate of return (r) minus the constant growth rate of the dividend (g).<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">In essence, the Dividend Growth Model utilizes the investor&#8217;s required RoR and the dividend growth rate to calculate the value of the stock.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">But dividends will increase at different percentages. For example, dividends will grow quickly and then reach a steady rate. The dividend is still supposed to be $2 per share next year, but dividends will progress yearly by 14%, then 20%, then 24%, and then stable rise by 10%.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">By using components of this formula, but examining every year the recent dividend growth individually, we can determine the current value of the stock.<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Following_the_inputs_for_our_example_Gordon_Growth_Model_formula_shows\"><\/span><span style=\"font-weight: 400;\">Following the inputs for our example Gordon Growth Model formula shows:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><strong>D1 = $2.00<br \/>\nk = 10%<br \/>\ng1 (dividend growth rate, first year ) = 14%<br \/>\ng2 (dividend growth rate, second year) = 20%<br \/>\ng3 (dividend growth rate, third year) = 24%<br \/>\ngn (dividend growth rate every year after) = 10%<\/strong><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Lets_calculate_the_fair_dividends_for_those_years_we_already_find_the_dividend_growth_rate\"><\/span><span style=\"font-weight: 400;\">Let&#8217;s calculate the fair dividends for those years (we already find the dividend growth rate):<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><strong>D1 = $2.00<br \/>\nD2 = $2.00 * 1,14= $2,28<br \/>\nD3 = $2,28 * 1,20 = $2,74<br \/>\nD4 = $2,74 * 1,24 = $3,40\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The next step is to calculate the current value of every single dividend during the extraordinary growth period:<\/span><\/p>\n<p style=\"text-align: justify;\"><strong>$2,00 \/ (1,20) = $1.67<br \/>\n$2,28 \/ (1,20)^2 = $1.58<br \/>\n$2,74 \/ (1,20)^3 = $1.59<br \/>\n$3,40 \/ (1,20)^4 = $1.64<\/strong><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Now we can calculate the dividend in the year of stable growth of 10%:<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"D5_340_110_374\"><\/span><span style=\"font-weight: 400;\">D5 = $3.40 * 1.10 = $3.74\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Further, we can use the Gordon Growth Model\u2019s formula to calculate the value of dividends in the 5th year:<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"37402-01_3740\"><\/span><span style=\"font-weight: 400;\">$3.74\/(0.2-0.1) = $37.40<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">This allows us to calculate the present value of the dividend\u2019s growth in this 5th year, or how much that future growth is worth to us today:<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"37401105_2322\"><\/span><span style=\"font-weight: 400;\">$37.40\/(1.10)^5 = $23.22<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The final step is to calculate the current intrinsic value of stocks by summing up the present value of dividends in the first four years and the value of dividends in the fifth year.<\/span><\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"1671581591642322297\"><\/span><span style=\"font-weight: 400;\">1.67+1.58+1.59+1.64+23.22=$29.7<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The main benefit of this formula is that it may cool down your emotions when trading. <\/span><span style=\"font-weight: 400;\">Calculating this can bring you down to the ground in growth periods, and also can support you when the market is falling.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"So_can_the_Gordon_Growth_Models_formula_predict_the_future_market_returns_In_short_yes\"><\/span><span style=\"font-weight: 400;\">So, can the Gordon Growth Model\u2019s formula predict the future market returns? In short, yes.\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"But_the_weakness_of_the_Gordon_growth_model_is_its_hypothesis_that_there_will_be_a_constant_growth_in_dividends_which_is_rare_So_you_can_use_this_formula_for_companies_with_stable_growth_rates\"><\/span><span style=\"font-weight: 400;\">But the weakness of the Gordon growth model is its hypothesis that there will be a constant growth in dividends which is rare. So, you can use this formula for companies with stable growth rates.<br \/>\n<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>5 min read by Gorica Gligorijevic The Gordon Growth Model is useful to determine the intrinsic value of a stock and you will see how. It is all math. Anyone who wants to be a profitable trader has to know math. Profitable trading is not about feelings, or prophecy and stock advice or picks. It [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":14912,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[1016,1012],"tags":[1139,380,1140,104],"class_list":["post-14909","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-how-to-master-in-trading-advanced","category-traders-secrets","tag-gordon-growth-model","tag-intrinsic-value","tag-math-behind-trading","tag-trading"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Gordon Growth Model - Mathematics of Trading - Traders-Paradise<\/title>\n<meta name=\"description\" content=\"The Gordon Growth Model is useful to determine the intrinsic value of a stock based on future dividends that grow at a constant rate.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gordon Growth Model - Mathematics of Trading - Traders-Paradise\" \/>\n<meta property=\"og:description\" content=\"The Gordon Growth Model is useful to determine the intrinsic value of a stock based on future dividends that grow at a constant rate.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/\" \/>\n<meta property=\"og:site_name\" content=\"Traders-Paradise\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/TradersParadisecom\" \/>\n<meta property=\"article:published_time\" content=\"2019-08-12T05:53:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-03-25T13:48:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/traders-paradise.com\/magazine\/wp-content\/uploads\/2019\/08\/Gordon-2-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1185\" \/>\n\t<meta property=\"og:image:height\" content=\"553\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Editor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Traders_Paradis\" \/>\n<meta name=\"twitter:site\" content=\"@Traders_Paradis\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Editor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/traders-paradise.com\/magazine\/2019\/08\/gordon-growth-model-mathematics-of-trading\/\"},\"author\":{\"name\":\"Editor\",\"@id\":\"https:\/\/traders-paradise.com\/magazine\/#\/schema\/person\/ce94bb3c5a52307ca7be58f0e7b93ffe\"},\"headline\":\"Gordon Growth Model &#8211; 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