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Want to learn how to get free Apple gift cards? Here are 13 ways.

Want to learn how to get free Apple gift cards?

Who wouldn’t want to receive Apple gift cards for free? After all, you can use an Apple gift card for buying a laptop, iPhone, iPad, Apple Watch, iCloud, and more. In this article, I’ll share several methods to help you earn Apple gift cards all from home.

Many websites allow you to earn free Apple gift cards by completing simple tasks, scanning your grocery receipt, or participating in market research. These platforms don’t only provide Apple gift cards; some also offer other free gift cards like Visa or Amazon.

Now, before you think this isn’t possible. I have personally earned over 100 free gift cards over the years and it’s always nice to use a free gift card to pay for something that I want.

Related content:

How to Earn Free Apple Gift Cards

Today, I will be talking about the different ways you can earn free Apple gift cards. By spending your time on these sites and apps, you can earn rewards and points that can be traded for gift cards.

Here’s a quick list before we begin:

1. Swagbucks

Swagbucks is a popular rewards platform where you can earn points (called Swagbucks or SBs) by completing tasks like taking surveys, watching videos, or playing games. The earned points can be redeemed for various gift cards, including Apple Store gift cards (and even Google Play gift cards).

I have been using Swagbucks for years, and I have earned over 105 gift cards for free so far. It is easy to earn points and the site is very easy to use.

How Swagbucks works:

  1. Click here to sign up for free for Swagbucks (and receive a $10 bonus).
  2. Start collecting points by answering surveys, using their search engine, playing games, using coupons, and more.
  3. After you’ve collected enough points, you can redeem them for Apple gift cards. (as well as many other options).

2. Fetch Rewards

Fetch Rewards is an app that allows you to earn points by scanning receipts from grocery stores. The points earned can be redeemed for Apple gift cards and other rewards.

I use Fetch Rewards every single time I go to the grocery store. It takes less than a minute to use and earn points, so it’s a no-brainer. My routine involves visiting the grocery store and shopping as usual. No need to open the Fetch Rewards app beforehand. After shopping, I check out, and upon getting home, I open the app on my phone and take a photo of my receipt. Fetch Rewards swiftly scans and credits my account with points – a quick and easy process!

Here is how Fetch Rewards works:

  1. Purchase items in your usual manner, whether online or in physical stores.
  2. Capture an image of your receipt using your phone when you’ve finished shopping.
  3. Accumulate points through Fetch Rewards.

You can sign up for Fetch Rewards by clicking here.

3. Honey

Honey is a browser extension that automatically applies coupon codes when you shop online.

Honey is a little secret weapon for online shopping. Imagine shopping like you usually do, and right at checkout, Honey swoops in to find and apply the best coupon codes for you.

Later on, you can turn those points into free Apple gift cards. And guess what? It’s super simple – just two clicks! Oh, and the best part? It won’t cost you a dime – it’s totally free!

You can learn more about Honey here.

4. American Consumer Opinion

American Consumer Opinion is a market research company that rewards users for sharing their opinions through online surveys. Once your earnings reach a certain threshold, you can redeem them for gift cards or cash.

Signing up won’t cost you a thing, and you can earn $1 to $5 (the longer surveys pay more!). They’ve given out a whopping $35 million+ to survey takers, with 20 million surveys posted. And guess what? They’ve got a massive community of 7 million+ members!

Click here to sign up for American Consumer Opinion.

5. Survey Junkie

Survey Junkie is a dedicated survey platform where you can earn points by taking part in daily surveys. These points can be exchanged for Apple gift card codes or other rewards like PayPal money or prepaid Visa debit cards.

Answering three surveys daily on Survey Junkie will earn you around $40 a month.

Companies pay for opinions and online surveys because they are trying to figure out what they can do to improve their products and company. Sometimes, they even use feedback to create whole new products to fill a need. Paid online surveys are extremely helpful for a company, as you can see.

You can sign up for Survey Junkie by clicking here.

6. Branded Surveys

Branded Surveys is another survey platform where you can earn points by answering questions, which can later be redeemed for free gift cards. The surveys typically take 5-15 minutes to complete, and your feedback helps improve a company and/or their product.

They’re all about online surveys that pay you, ranging from $0.50 to $5.00 per survey. And here’s the kicker: joining up is absolutely free, just like I always suggest.

Now, here’s the cool part – Branded Surveys has showered their members with over $39 million in rewards. Impressive, right? And the cherry on top? They’ve got a treasure trove of 100+ free gift card options, such as free Apple gift cards.

You can sign up for Branded Surveys by clicking here.

7. Prize Rebel

Prize Rebel is a platform that offers a wide array of tasks to complete for rewards points. These tasks include surveys, watching videos, and even signing up for offers. Once you accumulate enough points, you can redeem them for Apple gift cards or other rewards.

What makes Prize Rebel shine? It’s a global party! Whether you’re in the U.S. or beyond, they’ve got room for you. No more location troubles! You can use Prize Rebel from almost any country in the world. However, surveys are not available to every country, but there are still other ways to earn points on this website such as by completing offer walls and referring new members.

And the cherry on top? They’ve shared over $29 million in cash and free gift card rewards since 2007. Time to snag those rewards, my friend!

You can sign up for Prize Rebel by clicking here.

8. User Interviews

Listen up, because User Interviews is a standout in this lineup! It’s not your usual online survey spot – it’s a market research game changer. They pay much higher than the average survey site.

User Interviews is a platform that connects researchers with participants to conduct studies. By participating in these studies (usually in the form of interviews), you can earn cash, which can be used to buy Apple gift cards or other items.

You can earn $50 to $100 per hour or even more by sharing your insights on User Interviews on a variety of topics. Average payout? A sweet $65. These discussions happen over the phone or via video calls, with interviewers asking the questions. And guess what? They kickstart 2,000+ studies monthly, and they’ve rewarded over 87,000 folks in just the past year.

Click here to sign up for User Interviews.

9. Upside

Upside is a cash back rewards platform specifically for gas purchases. By using the app to find and purchase gas, you can earn cash back that can be redeemed for gift cards, such as for free iTunes gift cards.

This nifty phone app puts cash in your pocket whenever you hit up specific gas stations listed in their app. Now, not every single gas station will show up in the app, so you do need to do a little more work to get points (such as by going to a different gas station than normal).

Here’s how it works: Open the app to find nearby gas stations. Now, the fun part: you could score up to $0.25 per gallon cash back on gas! And the rewards don’t stop there. You can turn those earnings into cold hard cash in your bank or score awesome free gift cards.

You can sign up for Upside here.

10. InboxDollars

InboxDollars is another well-known platform that pays users for completing surveys, watching videos, reading emails, and even shopping online. You can cash out your earnings in the form of Apple gift cards or other popular options.

Most of their surveys pay around $0.50 to $5.00 and take 3 to 25 minutes to answer. The longer the survey, generally the more money it pays.

By signing up for InboxDollars via this link, you can get a free $5 sign-up bonus.

11. Ibotta App

Ibotta is a cash back app that gives you money when you shop, such as at a grocery store. By using the app and uploading your receipts after you’re done shopping, you can earn cash back on your purchases, which can be redeemed for Apple gift cards. I use Ibotta all the time and it is a great app!

Here’s how Ibotta works:

  • Step one: Get the app.
  • Step two: Browse available offers at the store you are planning to shop at.
  • Step three: Scan your receipt after you’re done shopping.

Ibotta is similar to Fetch Rewards, but there is a little more work involved. To get points on Ibotta, you will have to go to the app before you go to the grocery store and select the deals that you plan on buying. But, you are usually able to earn more points on Ibotta. The great thing about the two is that you can use the same receipts on both apps – so you can earn as many points as possible.

12. MyPoints

MyPoints is another rewards platform similar to Swagbucks, where you can earn points for shopping, playing games, and taking surveys. The points can be redeemed for Apple gift cards, Walmart gift cards, and more.

MyPoints has been featured in The New York Times, ABC News, Yahoo, and more.

They have given out more than $236 million in gift cards and PayPal cash since 1996.

Sign up for MyPoints here.

13. Referral Programs

By participating in various referral programs, usually by referring friends to a specific site or product, you can earn rewards points or cash that can be exchanged for Apple gift cards.

If you’re a fan of a website, service, or product, it’s worth checking if they have a referral program. You might score some awesome rewards while spreading the love!

How to Redeem Apple Gift Card Codes

So, you’ve redeemed your points and received an Apple gift card code. What’s next?

Apple Gift Cards can be used at the Apple Store, the Apple Store app, Apple.com, the App Store, iTunes, Apple Music, Apple TV, and Apple Books. So, you have a lot of options as you can see!

If it’s a physical gift card that you were given, then you will need to find the 16-digit code on the back of your Apple gift card or iTunes gift card. If your code is via email, you will have to simply just grab the code from the email that you receive. This code is important for redeeming the value of your gift card. Then, you will go to the App Store or the Apple website to redeem your gift card.

Also, quick note: you don’t need to have a current Apple account to use a free gift card. You can use your free gift card in-person at an Apple store (such as one at a mall near you).

But, if you want to redeem your free Apple gift card code via the online App Store, you will simply use your Apple device, such as a Mac, iPad, or iPhone and follow these instructions:

How to redeem a free Apple e-gift card on a Mac:

  1. Open the App Store on your computer.
  2. Click your name or the sign-in button.
  3. Click Redeem Gift Card and follow the instructions.
  4. If you have trouble redeeming the card with the camera, you can also enter your gift card code manually.

How to redeem a free Apple e-gift card on an iPad or iPhone:

  1. Open the App Store on your device.
  2. Click on your profile picture.
  3. Scroll down to Redeem Gift Card or Code and follow the instructions.

After you successfully redeem your gift card, the balance will automatically be added to your Apple ID account. You can now use this credit to purchase Apple products like Macs, iPads, AirPods, and accessories. This area will also show you your Apple account balance so that you know how much you have left.

Frequently Asked Questions About Free Apple Gift Cards

Here are answers to common questions about how to get an Apple gift card for free.

How can I get a free Apple gift card?

You can get a free Apple gift card by signing up on the websites above. These websites will pay you to complete a variety of tasks like answering paid surveys, watching videos and movies, or shopping online through their site. In return, they give you points that can be redeemed for Apple gift cards.

How can I get a $15 iTunes gift card code for free?

To get a $15 iTunes gift card for free, you can participate in tasks or activities on the many different sites above. These websites above give you rewards for shopping online, answering surveys, scanning your grocery receipts, and more. By earning points, you can redeem free Apple card codes for the amount you want, such as $15. Most websites will have a minimum that you can redeem as well.

What are some ways to earn free Apple gift cards online?

Some ways to earn free Apple gift cards online include participating in surveys, watching videos, shopping, or using cashback websites. Sites like Swagbucks, MyPoints, InboxDollars, and Rakuten can help you get free gift cards by earning points which you can redeem for Apple gift cards later.

Are there any apps that help in getting free iTunes gift card codes?

Yes, several apps help you to get free iTunes gift card codes. Swagbucks and Fetch Rewards are examples of apps that reward you with points for completing all different kinds of tasks. You can redeem your points for free iTunes gift card codes.

Where can I find free Apple gift card codes without taking surveys?

Okay, I get it – there are a lot of survey companies on this list! Finding free Apple gift card codes without signing up for a survey site can be a bit challenging, as most websites offering gift cards usually require participation in surveys, focus groups, or product testing. However, you can try using an app like Fetch Rewards, which gives you points for scanning your grocery receipts.

Do giveaways or contests offer a chance to win Apple gift cards?

Yes, you can win free Apple gift cards by entering giveaways and contests. These types of giveaways can be found on social media or websites, and participation often involves simple things that you need to do like following an account, sharing posts, or leaving a comment. You can start by simply searching #giveaway on social media. There are also giveaway websites that you can search for on Google that lists giveaways from around the web.

Are there any websites with free iTunes gift card email delivery?

When you earn a free iTunes gift card through many of the websites above, they typically give you the gift card code via email. Once you have enough points to redeem a gift card, the website will send you the gift card code through email, which you can use to add credit to your Apple account. Using your e-gift cards is very easy and quick! I have done it over 100 times.

How To Get Free Apple Gift Cards – Summary

I hope you enjoyed this article on how to get Apple gift cards for free. As you can see, there are many great options! Many of the sites above will give you several different gift card options other than Apple as well, such as free Visa gift cards, Amazon gift cards, and more.

Here’s a list of the different ways you can earn free Apple gift card codes:

Have you ever earned free Apple gift cards? Did you know that this was possible?

Source: makingsenseofcents.com

Apache is functioning normally

MGIC Investment Corp., the largest provider of private mortgage insurance, said today it lost $273.3 million during the fourth quarter, compared to a quarterly loss of $1.47 billion a year earlier.

But though losses have decreased, the company doesn’t expect profitability during 2009, and worse, warned that it may need additional capital to continue writing new business.

Not that business is booming anyways.  New mortgage insurance written during the quarter totaled just $5.5 billion, down from $24 billion a year earlier.

For all of 2008, new insurance written totaled $48.2 billion, off from $76.8 billion last year.

Meanwhile, 12.37 percent of the company’s insured loans were delinquent, up from 7.45 percent last year and 6.13 percent at the end of 2006.

The Milwaukee-based insurer noted that the mortgage industry is experiencing material losses on 2006 and 2007 books, which could push MGIC’s risk-to-capital ratio beyond levels necessary to meet regulatory demands.

“Because we cannot predict future home prices or general economic conditions with confidence, we cannot predict with confidence what our ultimate losses will be on our 2006 and 2007 books,” the company said in its earnings release.

“Our current expectation, however, is that these books will continue to generate material incurred and paid losses for a number of years.”

“As a result, we are considering options to obtain capital to write new business, which could occur through the sale of equity or debt securities and/or reinsurance. We cannot predict whether we will be successful in obtaining capital from any source but any sale of additional securities could dilute substantially the interest of existing shareholders.”

The company made a series of underwriting changes over the last year and change to mitigate losses, but continues to experience painful losses on the high-risk loans it insured during the tail end of the housing boom.

Their outlook certainly doesn’t bode well for mortgage insurers, much less the industry as a whole.

Last June, mortgage insurer Triad Guaranty halted new business and cut jobs because of rising mortgage defaults and costly claims.

I wouldn’t be surprised to see a few more follow down that path this year.

(photo: przemkostachowski)

Source: thetruthaboutmortgage.com

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One of the key reasons renters are getting caught in the crossfire of the mortgage rates is that it is increasing rental demand, said Oliver Knight, head of residential development research at real estate firm Knight Frank.

Oscar Wong | Moment | Getty Images

LONDON — Mortgage rates are soaring in Britain, and many are now questioning whether they can still afford to pay their mortgage, while prospective first-time homeowners are considering putting off buying in the hopes of securing a better deal in the future.

“Anyone with a mortgage who needs to refinance faces a pretty startling rise in their monthly repayments,” Ed Monk, an associate director for personal investing at Fidelity International, told CNBC Make It.

And homeowners and would-be owners aren’t the only ones affected — renters, too, are feeling the impact in an already difficult rental market, Richard Donnell, executive director of research at Zoopla said.

“Rents are rising across the country and running ahead of the growth in earnings for some months now,” he told CNBC Make It.

“Demand is being stoked by a strong jobs market, record immigration and rising mortgage rates,” Donnell said.

Mortgage crisis

Britain’s mortgage crisis has been brewing for months. Hundreds of mortgage deals were halted or changed last September as market turmoil took hold of the U.K. economy. This prompted concerns about higher base rates and how that could affect mortgages and their affordability going forward.  

Many mortgage products are directly linked to the U.K. central bank’s base rate — meaning that if the Bank of England hikes interest rates, mortgage costs shoot up for many borrowers.

Some mortgage products were pulled again last month after further concerns about how high interest rates could go. Earlier this month, British mortgage rates hit a 15-year high, and bodies including the Bank of England warned that there could be tough times ahead for the market.

Significant cost increases would be detrimental for many homeowners, putting pressure on household finances and leading to insolvency for potentially millions of households.

Solutions ahead?

An imminent solution appears to be unlikely, but there are some options for homeowners that need to re-mortgage their home, experts say.

“A mortgage adviser with access to a wide range of mortgage products should be able to help you find the best deal,” Monk suggested.

What type of mortgage you choose is also key, he adds, noting that both fixed-rate and so-called tracker mortgages where the rate changes in line with central bank interest rate decisions are worth considering.

Nicholas Mendes, a technical mortgage manager at mortgage broker and advisor John Charcol, told CNBC Make It that there are pros and cons to both.

“The key benefit of a tracker mortgage are the flexibility and the ability to change to a new product without any early repayment charges,” he said.

However, it means there is uncertainty about how much monthly mortgage payments come to, and there is the risk of them rising, Mendes explained.

Other options available to mortgage holders are, for example, increasing the term of their mortgage to lower monthly payments, or switching to an interest-only mortgage, Mendes said.

“Those lucky enough to have significant savings or investments could consider using them to pay down some debt,” Monk added.

But some of these solutions like using savings or extending the mortgage term could even lead to further pain down the road despite being relieving in the short term, the experts said.

If your mortgage is due to expire soon, there are various steps you can take – ideally several months before it runs out, Mendes said. This includes staying with your current lender, at a different rate, switching lenders, or transferring your mortgage product, he explained.

Renters caught in crossfire

One of the key reasons renters are getting caught up in the mortgage rate surge is that it is also increasing rental demand, said Oliver Knight, head of residential development research at real estate firm Knight Frank.

“The sharp increase in mortgage rates, and the knock-on impact that has had on affordability, make buying a home an impossibility for many in the short-term,” he told CNBC Make It.

“For the rental market that is fuelling a further increase in demand which comes against a backdrop of constrained supply.”

Urvish Patel and Barry Naisbitt, economists at the National Institute of Economic and Social Research, have also noticed this trend.

Prospective buyers may feel “trapped” in the rental market, which could deter them from trying to buy, they told CNBC Make It. This in turn increases demand for rental properties, which can then boost rents, they added.

Rising costs for landlords may also play a role, Donnell said. Higher mortgage rates are prompting some of those who still have mortgages to pay off to pass on those additional costs to renters, he said.

NIESR’s economists echoed his comments, adding that recent regulatory changes have also worsened the problem.

“Recent changes to buy-to-let investment rules and higher mortgage costs for buy-to-let landlords will likely make buy-to-let investments less attractive or even unviable, leading such landlords to sell their properties. This action would result in a squeeze in rental property supply,” they said.

‘No signs of abating’

Solutions are still few and far between for renters.

“The supply-demand imbalance in the rental market shows no signs of abating,” Knight said.

The main long-term solution flagged by the experts is increasing the supply of rental properties and building new homes. Progress is being made, but “expansion is not happening at a pace fast enough to reverse the current imbalance,” Knight explained.

Patel and Naisbitt added that there are some shorter-term options, such as payment plans for tenants that ensure they can afford to pay rent, or caps on rent increases — but they come with risks.

“Such policies may squeeze some landlords and encourage them to sell properties, which, if they become private homes, may exacerbate rental supply tightness,” they said.

This leaves a gloomy outlook for renters, mortgage holders and potential buyers alike — and little hope of the situation easing imminently.

Source: cnbc.com

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If you’ve already qualified for Social Security Disability Insurance (SSDI), you can earn up to $1,050 a month without triggering the income programs that could affect your benefits. If you’re still applying for benefits, you generally won’t qualify for disability if you make more than $1,470 a month ($2,460 if you’re blind)

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The Social Security Administration (SSA) has several work incentive programs to help disability recipients continue working. These include a trial work period (TWP), where there’s no earnings limit for nine months, an extended period of eligibility (EPE), which allows you to earn under the SSA’s limit for 36 additional months, and a Ticket to Work program, which offers free employment services.

Here are the rules for SSDI and how to work part time without losing your disability benefits.

Rules for receiving disability benefits

  • You can still work part time and receive SSDI benefits if you don’t meet the SSA’s requirements for “gainful” employment, according to Aleyda Toruno, a Work Incentives Planning and Assistance (WIPA) coordinator with Disability Rights California.

  • The SSA uses earnings guidelines called substantial gainful activity (SGA) to determine whether someone’s disability qualifies them as needing additional benefits.

  • The SGA for 2023 is $1,470 per month ($2,460 if you’re blind), meaning that if you earn more than that, you likely won’t qualify for benefits.

  • “The rules for part-time work or return to work differ for a person who is still attempting to prove disability versus a person who has already been deemed disabled under Social Security’s programs,” says Jennifer Cronenberg, senior counsel and director of legal information at the National Organization of Social Security Claimants’ Representatives (NOSSCR).

  • “Anyone who is already receiving SSDI benefits who returns to any type of work should report their earnings to SSA immediately,” Cronenberg says. This is to avoid overpayment; they should also report a decrease or cease in work to avoid underpayment.

Work incentive programs

The SSA has three programs called work incentives to support disability recipients in returning to work. These can be “pathways for disability benefits recipients to test their ability to return to work without immediately losing their benefits,” Cronenberg says.

Trial work period

A trial work period allows a disabled person to test their ability to earn an income on their own for a set amount of time

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  • You’ll trigger a TWP automatically if you start earning over $1,050 per month while already receiving SSDI.

  • A TWP allows you nine months, not necessarily consecutive, in a rolling 60-month period in which you can earn any amount of money and still receive your full SSDI benefits.

  • You must still meet the definition of a disability and report your earnings to the SSA to qualify for a TWP.

  • “Earning well above SGA during a TWP could trigger a continuing disability review (CDR) with SSA, whereby they may determine that you’re no longer disabled and terminate your benefits,” Cronenberg says.

Extended period of eligibility

When the nine months of a TWP end, an extended period of eligibility gives you 36 more months to continue working and collecting SSDI.

  • Your income must stay below the SGA limit for the year ($1,470 for 2023, $2,460 if you’re blind) during an EPE.

  • Your benefits will be suspended if you earn above SGA during the 36-month period, but they can be reinstated if your earnings dip below SGA again.

  • If you earn above SGA but have other work incentives that apply, you can continue receiving benefits, Toruno says. For example, any work expenses that a person incurs because of their disability — such as transportation to and from work or specialized work equipment — are deducted from their earnings

    .

Ticket to Work program

The SSA’s Ticket to Work program connects SSDI recipients with free employment services such as career counseling and job placement to help them return to work

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  • Ticket to Work provides services instead of placing earnings limits. It’s “something that a person who is receiving SSDI can participate in if they would like help returning to the workforce, with the goal of reducing their need for SSDI,” Cronenberg says.

  • The SSA won’t conduct a CDR (and potentially suspend your benefits) while you’re participating in Ticket to Work.

  • Anyone receiving SSDI and interested in working qualifies as long as they are still disabled.

Frequently asked questions

What is a work incentive?

The SSA offers work incentive programs to help SSDI recipients return to work. A trial work period and extended period of eligibility allow you to continue to earn income, and the Ticket to Work program offers education, training and rehabilitation programs for individuals who need help looking for or staying in work.

Does SSI offer the same work incentives as SSDI?

SSI offers its own set of work incentives and programs that come with different rules and stipulations than SSDI. You can learn more on the Social Security website.

What happens if I lose my job while I’m on a trial work period?

If you start earning money that triggers a trial work period and then lose your job, you’ll keep your benefits. If you lose your job within your 36-month extended period of eligibility, you’ll need to contact the SSA to have your benefits reinstated.

Will I lose my Medicare coverage if I lose SSDI benefits?

No, you’ll still receive free Medicare Part A coverage for at least 93 months after your trial work period if you stop receiving SSDI payments because of your earnings. This is one of SSA’s work incentives. You’ll still need to pay a premium to receive Medicare Part B.

Source: nerdwallet.com

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The Dividend Discount Model (DDM) is a fundamental quantitative valuation tool used to help determine the intrinsic value of a stock. There are several variations of the model based on future cash flow assumptions of owning a stock.

The goal is to determine a stock’s fair value, then compare it to the market price. If a stock is found to be undervalued via the DDM, then an investor might buy shares. If the formula finds a stock is overvalued compared to the market price, it could be a candidate for a short sale.

The DDM has some shortcomings, and other valuation tools can be used in conjunction with it to help improve the accuracy of your fundamental analysis.

Additionally, traders can combine this fundamental analysis with technical analysis tools to determine optimal entry and exit points when buying and selling shares.

What Is the Dividend Discount Model (DDM)

The DDM uses a discounted cash flow approach to valuing a stock. The idea is that a stock’s value is simply the present value of future dividends when discounted back to the present. This equity valuation technique looks closely at the cash flows of a stock including future dividend payments and the sale of the stock itself at some future date.

You can think of it as a bottom-up investing approach. The dividend discount model is used to find stocks that are either under- or overvalued compared to the market price. Thus, it is used to find long and short ideas using fundamental analysis and equity valuation.

To better understand the DDM, it’s helpful to know how business fundamentals, and fundamental stock analysis, works.

When a firm earns profits, it can either retain those earnings or pay them out as dividends. The DDM can work best with companies that pay out a large proportion of its profits as dividends. The DDM does not work as well on firms that do not distribute dividends or on companies that pay very little out to shareholders.

The dividend discount model formula is also based on the notion of the time value of money, which says that a dollar today is worth more than a dollar in the future. For this reason, firms that have big dividends today are generally thought to be worth more than those that defer them to the future (per the calculation).

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

Dividend Discount Model vs Discounted Cash Flow Model

The Dividend Discount Model (DDM) is closely related to the Discounted Cash Flow Model (DCF) but has distinct differences.

The DDM focuses on the cash flows associated with holding a stock, including dividends and cash received upon a stock sale.

The DCF model examines the cash flows in a company and determines the overall market value of the company. Cash flows include profits, depreciation, changes in accounts receivable, changes in accounts payable, etc. As you might imagine a DCF calculation is extremely detailed and requires some financial and accounting acumen to perform accurately.

Both models require determining future cash flows and forecasting the future requires a mix of art and science to develop accurate valuations.

Dividend Discount Model Formulas

There are several dividend discount model formulas. Each is based on the nature of future dividend distributions from the company to shareholders.

Gordon Growth Model

The Gordon Growth Model (GGM) is one of the most popular versions of the DDM. It is named after American economist Myron Gordon, who first developed the valuation technique. The GGM is also a rather straightforward spin on the DDM since it assumes a stock will pay dividends at a constant rate into perpetuity.

You might use the GGM when analyzing very stable businesses that have steady cash flows and a track record of consistent dividend payouts. Big, blue-chip companies and utility stocks are good examples. The GGM is expressed as:

Where:

•   V0 = The current stock price

•   D1 = The dividend payment one period from now

•   r = The required rate of return on the stock

•   g = The constant growth rate of the company’s dividends into perpetuity

Be aware that the model is extraordinarily sensitive to the dividend growth rate used.

One-Period Dividend Discount Model

The one-period DDM is used less frequently than the popular Gordon Growth Model. It is useful when an investor wants to calculate a stock’s fair value in order to trade it after one period (often one year). Since it is a one-period look, a single dividend is used along with the proceeds of the sale of the stock. Those are the only two cash inflows.

Where:

•   V0 = The current stock price

•   D1 = The dividend payment one period from now

•   P1 = The stock price one period from now

•   r = The required rate of return on the stock

Multi-Period Dividend Discount Model

In contrast to the one-period DDM, the multi-period formula assumes that an investor plans to hold a stock over a period that features many dividend payments.

What makes this variation of the DDM tough is that you forecast several future dividends. There is no guarantee that a firm’s payout policy will match your forecast. Like other DDM models, a final return of capital is assumed — the sale price of the stock at the end of the holding period.

Each future dividend is discounted back to the present using a discount rate that is typically the firm’s estimated cost of equity.

Variable Growth DDM or Non-Constant Growth

You can get even more complex with the variable growth version of the dividend discount model formula. With this approach, you can divide growth into several stages.

Perhaps a firm will grow rapidly over the first year, slow down in year two, then finally transition into a steady grower into perpetuity. Some argue this is a more realistic way to value a stock versus other models. The variable growth DDM assumes non-constant growth by commonly using a two-stage or three-stage approach. Of course, even more stages can be applied.

Zero Growth DDM

A final approach is the zero growth dividend discount model. This is actually the simplest of all DDM variations. It is the same calculation you would use when valuing a perpetuity or preferred stock. It’s simply:

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Dividend Discount Model Example

Let’s perform an example using the most common DDM method: the Gordon Growth Model.

Suppose a company pays a current annual dividend of $5 (D0) and will grow it at a steady rate of 3% per year into perpetuity. Shares currently trade at $60. We will also assume we used the Capital Asset Pricing Model to find the firm’s 10% estimated cost of equity. Here’s how the DDM would look:

Since we found the stock’s intrinsic value to be significantly higher than the market price, we might buy shares with the thought that eventually the market will realize how valuable the stock is and the price will move towards our valuation.

Interpreting DDM Results

Interpreting the results from the dividend discount model is straightforward, but it is getting to the output that can be tricky. The inputs to the calculation are often subjective and can change over time, so any interpretation should be taken with a grain of salt.

Dividends can be hard to forecast accurately, and valuations are sensitive to the growth and discount rates chosen. The analyst must also be open to the possibility that market forces can cause an over- or under-valued stock to further drift from intrinsic value.

How Investors Can Use DDM

The dividend discount model, and all its variations, can be used to calculate a stock’s fair value. In practice, that fair value is then compared to the market price.

Investors can choose to go long shares when they determine that a company’s intrinsic value is above the market price. They can also short shares if the DDM valuation method determines that a stock is overvalued compared to the market price.

The dividend discount model can be used to value stocks in different sectors to see which might be the best investment.

The use of the DDM is based on fundamental analysis and the notion that stock values ultimately revert to their intrinsic worth based on the present value of future cash flows.

Investors can use the DDM along with other valuation techniques to help form a better mosaic of a company’s value. Moreover, technical analysis indicators could be used for more precise buy and sell price points.

The Takeaway

The dividend discount model formula is one of the most widely used equity valuation techniques. Its premise is that firms pay out a large proportion of their profits as dividends to equity holders, thus an intrinsic value can be calculated using those predictable future cash flows.

There are several variations of the DDM based on the profile of a firm’s future dividends. There are drawbacks to the DDM, and using other valuation methods can help an analyst determine if a stock is over- or under-valued.

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Apache is functioning normally

Zillow is getting into the mortgage game as it bids to own more of the home buying process. The company has just acquired Mortgage Lenders of America to fuel its new bid, it said in an announcement timed to coincide with its second-quarter earnings report.

The company reported total revenue of $325.2 million for the second quarter, up 22 percent compared to one year ago. Profits came in at 13 cents per share, excluding certain costs, above Wall Street’s estimates of profits of 10 cents a share.

Mortgage Lenders of America is a national brokerage headquartered in Overland Park, Kansas. With the acquisition, Mortgage Lenders’ 300-odd employees will now become a part of the Zillow Group.

Terms of the acquisition were not disclosed.

Zillows move into mortgage lending doesn’t come as a surprise, as the company recently kicked off a new line of business this year that involves buying up homes, doing them up and selling them on. Zillow’s Instant Offers service was first made available in Phoenix, Arizona, and has already been expanded to Las Vegas and Atlanta since then. Now, by acquiring a lender, Zillow can serve its customers during more steps of the home buying process.

“We’re taking our huge advantages, which are our audience and our brand and our resources, and expanding into other business vertically,” Zillow CEO Spencer Rascoff said on the company’s second-quarter earnings call.

Zillow’s audience is certainly big enough, as it reported 186 average monthly users during its most recent quarter, up 4 percent year-over-year. This figure includes all of Zillow’s brands, including Trulia, RealEstate.com and StreetEasy.

“This quarter also marked a major milestone in Zillow Group’s history, as we launched our Homes business and began buying houses directly from homeowners in two cities through Zillow Offers,” Rascoff said in a statement. “At this exciting time in the real estate industry, Zillow Group is committed to developing innovative technology and services, like Zillow Offers and, with today’s announcement, potential for mortgage originations, that help our partners meet evolving consumer expectations, while generating more revenue opportunities.”

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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Source: realtybiznews.com