Companies that increase their dividend payout. The dividend growth model is used to determine the rate of return or cost of equity needed by shareholders of a company that pays dividends that increase continuously over time.
What is the purpose of the dividend growth model?
The dividend growth model is a mathematical equation that investors can use to calculate a fair value for a company's stock based on its current payout and anticipated future dividend growth.
What model also goes by the name of the dividend growth model?
The Gordon Growth Model, sometimes referred to as the dividend discount model, establishes the market value of a publicly traded stock by adding the present values of all anticipated future dividend payments.
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