Snyder Co. is experiencing a period of rapid growth. Earnings and dividends are expected to grow...

Question:

Snyder Co. is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next 2 years, at 13% in the third year, and at a constant rate of 6% thereafter. Snyder's last dividend was $1.15, and the required rate of return (equity cost of capital) on the stock is 12%. Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.

Dividend Yield:

The dividend yield is a ratio that compares the dividend generated from the company with its existing share price. This ratio is used by investors to compare the dividend yield of several companies.