Stock Valuation Theory - Dividend Discount Model (Part 1 of 2)

This video (combined Parts 1 and 2) is part of a series of videos discussing stock valuation. This video focuses on the theoretical approach of the Dividend Discount Model of Stock Valuation.
This is Part 1 of 2 videos that discuss the theoretical approach to valuing a stock known as the Dividend Discount Model. This video was created primarily as a self-paced learning reference for students who participate in the Saluki Student Investment Fund (SSIF) at Southern Illinois. While others are allowed to view this video, it should be noted that it is provided for educational purposes only.
Part 1 discusses the motivation and derivation of the Dividend Discount Model (DDM) and its simplest form, the constant dividend. Part 2 develops the constant dividend growth extension and the flexible multistage approach.
The video assumes that the viewer has a basic understanding of time value of money concepts including present value, future value, discount rates, and compounding. Simple examples are offered throughout each video.
I hope that you find these videos helpful. If you do, I would appreciate hearing from you. I also appreciate constructive criticism and tips on how to improve these videos.
The music is "Gnomone a Piacere" by MAT64 (www.mat64.org/).

[@KingMalikKYH]

how does this not have more comments and more views?! thank you Dr. Greene!

[@mariusmadou235]

Fantastic! Crystal clear and life saving video. You have unlocked the mystery of the DDM.
Do you have a video on CAPM beta?
Many thanks Professor.

[@SuperGrey95]

Thank you so much for making this concept easy to understand! Best Video equity valuation !

[@jchen728]

Very intuitive explanation, thank you so much

[@Ezyhahaha]

perfect! exactly what I needed. Thank you Dr Greene

[@sahil99farm]

Neat and Simple. Much thanks.

[@rendallharper633]

Thanks you Dr. Greene!

[@chuangtian3683]

So great, I hope you will make more.

[@edcfyau]

this is great stuff. more please

[@devanshkothari303]

Amazing video

[@zevza]

Oh man, youre the MAN!!

[@Cherrybomb999999]

thx , awesome

[@chaitalishah9106]

nyc video bt i have a question. Y dont u take years into consideration....plz help me understand the PV of perpetuity theory. Also in constant dividend, why the growth rates are also constant.Is it sum kind of assumption?? Doesn't sound practically right when assuming the value of the stock

[@DevedMarqoz]

i have just one quastion. what happens with the sell price in the future why does it "dissapear" ?

[@sahil99farm]

It doesn't disappear. Look carefully. The SP in Year T will be the PV of the dividends received in the years following Year T. So ultimately all we have is dividend.

[@mariajauslin1107]

but k is also a growth right? i mean when you discount it by k, this means that it has grown by k.

[@rahuluppal7371]

I don't think the conclusion about k is correct in the lecture. As you said "k" is some kind of risk factor. But i would contradict and say that "k" is the rate of return, and for higher value of "k' company is more valuable as we can say that for the same divident (D), one has to invest less amount initially (PV) when "k" is higher i.e rate of return is higher.
Anyone agrees with me?

[@jacobg9690]

K is just the WACC. so the higher the WACC the worse off the stock is.

[@eagle_8990]

@@jacobg9690 nope, k is rE or rD in this model (equity/debt cost of capital)
When you are analyzing a business instead of one single stock it indeed is the rWACC.

[@elliotwas7007]

What is 'k' in the formula?

[@claudiangcw]

discount rate

[@jacobg9690]

its the WACC.

[@rehabzaidalzahrani1976]

can i borrow ur mind for couple hours