Suppose that the annual dividend per share of stock is $1.40 and the closing price of the stock is $22.00, what would the yield approximately be on the stock?
Dividend yield is one source of return from investment in a stock, the other one being capital gain. The total rate of return on a stock is the sum of the dividend yield and the expected capital gains yield.
Answer and Explanation:
We can use the following formula to compute dividend yield:
- dividend yield = dividend per share / price per share
- dividend yield = 1.4 / 22
- dividend yield = 6.36%
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from Corporate Finance: Help & ReviewChapter 2 / Lesson 10