The dividend growth rate can be defined as the annualized percentage rate of development that a particular security’s dividend payment experiences over a stretch of time.
Having the option to figure the dividend growth rate is vital for utilizing the dividend discount model.
The dividend discount model is a sort of security valuing model.
The dividend discount model assumes that the assessed future dividends–discounted by the abundance of inward development over the organization's evaluated dividend growth rate– decides a given security’s price.
On the off chance that the dividend discount model procedure brings about a higher number than the present day price of a organization's equities, the model views the security as undervalued.
Analysts who utilize the dividend discount model accept that by evaluating the expected value of cash flow in the future, they can figure out the intrinsic value of a particular security.
A history of solid dividend growth could imply future dividend growth is likely, which can indicate long term profitability for a given organization.
At the point when a speculator ascertains the dividend growth rate, they can utilize any interim of time they wish.
They may likewise compute the dividend growth rate utilizing the least squares technique or by just taking a simple annualized figure over the time span.