According to the dividend discount model, the value of a stock does not depend on current dividend.
The dividend discount model (DDM) is a quantitative method which is used for predicting the price of a company's stock based on the theory that present-day price of company's stock is worth the sum of all of its future dividend payments when they are discounted back to their present value.
Dividend discount model attempts to calculate the fair value of a stock irrespective of the prevailing market conditions and takes into consideration the dividend payout factors and the market expected returns.
If the value which is obtained from the DDM is higher than the current trading price of shares, then the stock is undervalued and is qualifiable for a purchase and vice versa.
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