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Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF (or dividend- yield-plus-growth-rate) approach. In general, there are three available methods to generate such an estimate: Carry forward a historical realized growth rate, and apply it to the future. Locate and apply an expected future growth rate prepared and published by security analysts, . Use the retention growth model Suppose Tucker Enterprises's is currently distributing 40% of its earnings as cash dividends. It has also historically generated an average return on equity (ROE) of 15.50%. It is reasonable to estimate Tucker's growin rates al, there are three available methods to generate such rowth rate, and apply it to the future. e growth rate prepared and publish 75.50% rity analys 14.90% 16.10% ends. It has 9.30% y distributing 40% of its earnings as e to estimate Tucker's growth rate is 9.30%