Historical estimates from long-run stock and bond returns cluster around 4% to 6%, while forward-looking estimates derived from current earnings-yield and expected growth move with prices and can be lower.
Whichever you choose, keep it stable across companies. Varying the premium case by case to justify a target price is the most common way a valuation stops being analysis and becomes decoration.
Example: Northwind Tools is valued using a 4.6% equity risk premium. Raising it to 5.6% lifts the cost of equity to 10.1%, WACC to 8.9%, and cuts the DCF value by roughly 12%.
Related: cost-of-equity, wacc, discount-rate, sensitivity-analysis, earnings-yield