What yield should be used in the Graham Growth Model?

Our valuation tools are provided for educational purposes so that users can easily run their own valuations. The pre-defined values are simply a starting point based on global assumptions that we have applied across the entire market - users should amend them as they see fit and not regard them as a substitute for their own judgment.

In terms of the yield, Graham added this to make stock valuations vary inversely with representative current interest rates. When we set up the model, we used a long-term average value (5.22%) for AAA corporate bond yields, reflecting a nervousness about how interest rates have been artificially suppressed by QE (Graham was writing in a very different environment to today).

However, it's up to you if you use this rate or substitute with something more current. You can see an up to date US AAA 20 year corporate bond yield on Yahoo Finance here.

More generally, you can read more about the Graham Formula here. We also discuss our approach to the long-term growth rate here.