Question

One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 14.62 percent. Your capital gain was $3.48 a share. What was your dividend yield on this stock?

Answer 1

3.75%

Step-by-step explanation:

Purchase price of the stock = $32

Total return on the stock:

= Purchase price of the stock × Total return

= 32 × 14.62%

= $4.6784

Dividend gain on the stock:

= Purchase price of the stock + Total return on the stock - capital gain - Purchase price

= $32 + $4.6784 - $3.48 - $32

= $1.1984

Dividend yield:

= Dividend gain on the stock ÷ Purchase price of the stock

= $1.1984 ÷ 32

= 3.75%