DEFINITION of 'Dividend Growth Rate'
The annualized percentage rate of growth that a particular stock's dividend undergoes over a period of time. The time period included in the analysis can be of any interval desired, and is calculated by using the least squares method, or by simply taking a simple annualized figure over the time period.
INVESTOPEDIA EXPLAINS 'Dividend Growth Rate'
The dividend growth rate is necessary in order to use the dividend discount model, which is a security pricing model that assumes that a stock's price is determined by the estimated future dividends, discounted by the excess of internal growth over the firm's estimated dividend growth rate.
A history of strong dividend growth could mean that future dividend growth is likely, which can signal longterm profitability for a given company.
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RELATED FAQS

What are the advantages and disadvantages of the Gordon Growth Model?
The Gordon Growth Model, also known as the dividend discount model, measures the value of a publicly traded stock by summing ... Read Full Answer >> 
I would like to invest in a dividendpaying stock. How can I find out which stocks ...
There are several accessible sources to help investors identify dividendpaying stocks. Here are a few we can recommend: Generally, ... Read Full Answer >> 
How do I find the information needed for input into the Dividend Discount Model (DDM)?
Analysts and investors should utilize a company’s financial statements, stock information websites and any number of analysis ... Read Full Answer >> 
What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?
The parametric method, also known as the variancecovariance method, is a risk management technique for calculating the value ... Read Full Answer >> 
What is backtesting in Value at Risk (VaR)?
The value at risk is a statistical risk management technique that monitors and quantifies the risk level associated with ... Read Full Answer >> 
How do I discount Free Cash Flow to the Firm (FCFF)?
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