Suppose that the annual dividend per share of stock is $1.40 and the closing price of the stock...

Question:

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:

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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What Is Dividend Yield? - Definition & Calculation

from Corporate Finance: Help & Review

Chapter 2 / Lesson 10
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