Final answer:
The annual dividend yield is the dividend amount divided by the stock price at the beginning of the year. This yield has historically changed over the decades, with S&P 500 companies showing a decrease in dividend percentages since the 1990s.
Step-by-step explanation:
Dividend yield for a one-year period is calculated by taking the annual dividend amount and dividing it by the stock price at the beginning of the year. Therefore, the correct answer to the question is a) Stock price at the beginning of the year. The dividend yield represents the return a stock pays out in dividends each year relative to its share price and is expressed as a percentage. This yield is important for investors who are looking for income from their investments, such as those from stable companies like Coca-Cola or electric companies known to offer consistent dividends.
Over time, dividends have changed, which can be observed in the S&P 500 historical data. For example, from the 1950s to the 1980s, firms in the S&P 500 often paid annual dividends that were about 4% of their stock value, while from the 1990s onwards, dividends have dropped to typically provide a return closer to 1% to 2%. The disparity between capital gains and dividend earnings has varied across different decades, with the former being far higher in the 1980s and 1990s, according to the data presented.