The variable-growth dividend valuation model develops the value of a stock using the future value of dividends minus a rate of capital gain growth. is valuable because it accounts for the general growth patterns of most companies. is invalid if at any point in time the growth rate exceeds the required rate of return. assumes the rate of dividend growth will vary indefinitely. Compared to income stock, growth stock has the following feature: low payout ratio and low PE ratio. low risk and low PB ratio. high payout ratio and high dividend yield. high PE ratio, high risk and low payout ratio