Which model is traditionally used to value stocks with dividend growth and can also be applied to real estate assets?

The Gordon Growth Model (GGM) is a widely recognized method for valuing stocks, particularly those that pay dividends. This model is based on the premise that dividends will increase at a consistent growth rate over time. The GGM simplifies the valuation process by allowing investors to calculate the present value of an infinite series of future dividends, which are expected to grow at a stable rate.

The reason the GGM is also applicable to real estate assets lies in the similar nature of cash flows. Just as dividends are reflective of a company's profitability and are often expected to grow, rental income from real estate can also experience steady growth. Investors can use the GGM to estimate the value of a property based on projected rental income, assuming that it will increase at a consistent rate over time.

In contrast, while the Capital Asset Pricing Model (CAPM) helps determine an expected return based on risk, and the Net Present Value (NPV) focuses on calculating the value of expected future cash flows discounted back to their present value, neither of these directly addresses the growth of cash flows in the same manner the GGM does. The Discounted Cash Flow (DCF) model, while related in concept, typically requires more complex assumptions around varying cash flows and growth rates compared