## Dividend Growth Model:

The dividend growth model is a stock valuation model that calculates the fair market value of the stock based on the constant growth of the company's dividend and the investors' required rate of return.

Formula on calculating the stock's dividend growth rate:

{eq}\begin{align*} Dividend~constant~growth~rate&=Required~return-\frac{Dividend}{Stock~price}\\ &=.16-\frac{2.50}{45.83}\\ &=.16-.05455\\ &=.10545\\ \end{align*} {/eq}

The constant growth rate of the company's dividend is 10.545%