The two-stage dividend discount model is used to value growth companies that experience two growth phases. In the first stage, the dividend grows at a constant rate for a limited time. In the second phase, the dividend is assumed to grow at a constant rate for the remainder of the company’s life. The dividend discount model uses the principle that money today is more valuable than money tomorrow. So, it takes the expected value of the dividends a firm will generate in the future and calculates its net present value (NPV)
This open-access Excel template is a useful tool for financial analysts, data analysts, and portfolio managers.
Two-Stage Dividend Discount Model is among the topics included in the Equity Investments module of the CFA Level 1 Curriculum. Gain valuable insights into the subject with our Fundamentals of Equity Valuation course.
You can also explore other related templates such as—Gordon Growth Model and Three-Stage Dividend Discount Model.