Dividend Policy Calculator (Walter Model)
Estimate share value under the Walter dividend model using earnings, payout, and cost of capital.
This calculator is designed for finance professionals and students seeking to apply the Walter Model to analyze dividend policies. It helps determine the intrinsic value of a stock based on dividends and rate of return.
Calculator
Data Source and Methodology
All calculations are based on the Walter Model as outlined in academic finance literature. Learn more. All calculations are strictly based on the formulas and data provided by this source.
The Formula Explained
\\( P = \\frac{D + (E - D) \\times \\frac{r}{k}}{k} \\)
Where \( P \) is the price per share, \( D \) is the dividend per share, \( E \) is earnings per share, \( r \) is the rate of return, and \( k \) is the cost of capital.
Glossary of Variables
- DPS: Dividend per Share
- Growth Rate: Expected annual growth rate of dividends
- Rate of Return: Required rate of return for shareholders
- Intrinsic Value: Calculated value of a stock based on its dividends and growth
Example in Practice
How It Works: A Step-by-Step Example
Consider a company paying a dividend of $2 per share, expecting a growth rate of 5%, and requiring a 10% rate of return. Using the formula, the intrinsic value of the stock is calculated as follows...
Frequently Asked Questions (FAQ)
What is Walter's Model?
Walter's model is a formula for determining the value of a company based on its dividend policy.
How does the calculator work?
The calculator uses the Walter Model formula to compute the intrinsic value of a stock based on given inputs.
Why is the growth rate important?
The growth rate affects the future dividends, which are a critical component of the stock's intrinsic value.
Can this model be applied to all companies?
Walter's model is best suited for companies with consistent dividend policies.
What if the required rate of return changes?
The intrinsic value will fluctuate with changes in the required rate of return.
Formula (LaTeX) + variables + units
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\\( P = \\frac{D + (E - D) \\times \\frac{r}{k}}{k} \\) Where \( P \) is the price per share, \( D \) is the dividend per share, \( E \) is earnings per share, \( r \) is the rate of return, and \( k \) is the cost of capital.
- No variables provided in audit spec.
- Learn more — unstop.com · Accessed 2026-01-19
https://unstop.com/blog/walter-model-formula
Last code update: 2026-01-19
- Initial audit spec draft generated from HTML extraction (review required).
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- Confirm sources are authoritative and relevant to the calculator methodology.