Question

What is the dividend yield on Stock A that sells at$20/share, when Company A pays a quarterlydividend of $0.05 per share?dividend yield = [?] %Give your answer as a percent rounded to thenearest tenth.Hint: Dividend Yield =(annual dividend)/share price

Answer 1

We are given a stock that has a share with market value of $20 per share.

The company issuing the shares also pays out a quarterly dividend of $0.05 per share.That means the annual dividend will be;

`\begin{gathered} \text{Quarterly}=0.05 \\ \text{Annual}=0.05*4 \\ \text{Annual}=0.20 \end{gathered}`

The dividend yield therefore would be;

`\text{Dividend yield}=\frac{Annual\text{ dividend }}{\text{Share price}}`
`\text{Dividend yield}=(0.2)/(20)`
`\text{Dividend yield}=0.01`

ANSWER:

`\text{Dividend yield}=1\%`

The dividend yield is 0.01 as a decimal. As a percent this now become 1% (that is 0.01 times 100)