when use DDM model, it gave: current stock price: $5 current retention ratio:0.9 so, the dividend will be 5*(1-0.9)=0.5 this is D0 or D1? I assume D0 is current dividend will be paid soon. D1 is the dividend paid at the end of the year. thanks.
did you mean current EPS being $5, rather than current stock price? Dividend is calculated based on EPS (earnings) not prices. D0, I assume, is what will be paid this year. D1 is what will be paid next year, in year 1.
D0 is what is being paid immediately, or has just been paid D1 is what will be paid over the next period