Companies that have a long history of paying dividends can be valued using dividendsbased valuation. The dividend discount model (DDM) estimates the intrinsic value of a company's common equity as the sum of all future dividends, discounted to their present value. The resulting figure is then divided by the number of common shares outstanding to obtain the estimated value of the company's common equity on a pershare basis.

The estimated value per share can then be compared to the actual value per share.

If the estimated value pershare is greater than the actual stock price, this suggests the company is undervalued.

If the estimated value pershare is less than the actual stock price, this suggests the company is overvalued.

Please remember that I am a professor and don't give stock tips; I made this video to show people how to value a company using dividendsbased valuation, not to tell people to invest or not invest in the company mentioned in this video.

Also, remember that dividendpaying companies can also be valued using other types of valuation methods, such as DCF valuation or relative valuation.
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