FM syllabus
DVM Limitations 10 / 20
Here are some weaknesses:
Figuring out how fast dividends will grow is tricky.
Finding the right return rate for a company that's not on the stock market is hard.
It has less relevance for valuing a majority shareholding, as such an investor has the ability to change the dividend policy.
It assumes that the cost of owning shares will stay the same and that the share price will go up as fast as the dividends.