Question

Gypsum Corp. pays out 25% of its earnings as dividends. Earnings per share are currently $1.32, book value per share is $16.80, and the market price per share is $22.44. What is the dividend yield?

A) 1.47%
B) 5.85%
C) 7.43%
D) 10.71%

Answer 1

The dividend yield is 1.47%

Step-by-step explanation:

To calculate the dividend yield, we need to divide the annual dividend per share by the market price per share. In this case, the annual dividend per share is 25% of the earnings per share, which is 25% of $1.32. So the annual dividend per share is $0.33 ($1.32 * 0.25). The market price per share is $22.44.

Now, we can calculate the dividend yield:

Dividend Yield = (Annual Dividend per Share / Market Price per Share) * 100

Dividend Yield = ($0.33 / $22.44) * 100 = 1.47%