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A company just paid a dividend of $1.75, and those dividends are expected to grow at a constant rate of 5.5% forever. The stock price of this company is $74.58, what is the stock's expected dividend yield?
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A company just paid a dividend of $1.75, and those dividends are expected to grow at a constant rate of 5.5% forever. The stock price of this company is $74.58, what is the stock's expected dividend yield?​

User Rwallace
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1 Answer

20 votes
20 votes

Answer:

2.48%

Step-by-step explanation:

Dividend yield = Expected annual dividend / Price today

Dividend yield = $1.75 * 105.5% / $74.58

Dividend yield = $1.84625 / $74.58

Dividend yield = 0.0247553

Dividend yield = 2.48%

So, the stock's expected dividend yield is 2.48%.

User Chesterbr
by
2.7k points
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