I have a quick question about the DDM dividend discount model.

Do we need to assume that the capital gain growth rate is the same as the dividend growth rate? and why ?

I have a quick question about the DDM dividend discount model.

Do we need to assume that the capital gain growth rate is the same as the dividend growth rate? and why ?

GGM implies that the constant growth rate, *g,* is the same and applies to both dividends and the intrinsic stock value, holding *r* and the payout ratio constant. But since capital gains involves appreciation in the market price (which could be different from the intrinsic value), I donâ€™t think we should assume the capital gain growth rate to be the same.