## Dividend Yield:

Dividend yield of a stock is the dividend payment from the stock as a fraction of the price of the stock. Dividend yield is part of a stock's total return, with the other component being capital gains yield.

We can use the following formula to compute the dividend yield

• dividend yield = dividend per share / price per share

Assuming a 100 par value, then the dividend per share for the preferred stock is 100 * 8% = 8. At the initial price of 50, the dividend yield = 8 / 50 = 16%.

At the current price of \$60 per share, the new dividend yield = 8 / 60 = 13.33%.