Currently, Digby is paying a dividend of $18.72 (per share). If this dividend were raised by...

Question:

Currently, Digby is paying a dividend of $18.72 (per share).

If this dividend were raised by $3.64, given its current stock price of $71.67, what would be the dividend yield?

A. $3.64

B. $22.36

C. 9.7%

D. 11.6%

Dividend Yield:

The dividend policy ratios provide the insights into the companies policy relating to rewarding the investors of common of the company stock by way of cash dividends and the amount retained for internal accrual. The dividend income is a source of regular income to the investors

Answer and Explanation:

The dividend yield shows the returns of dividend paid to the market price of the stock and expressed in percentage

  • The current year dividend is $22.36 ($18.72 + $3.64)
  • The current market price is $71.67

Dividend Yield = (current year dividend per share / market price per share) x 100
= (22.36 / 71.67) x 100
=0.31198 x 100
=31.20 %

The dividend yield is 31.2%, and the answer is none of the above


Learn more about this topic:

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What Is Dividend Yield? - Definition & Calculation

from Corporate Finance: Help & Review

Chapter 2 / Lesson 10
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