Question

A company reports basic earnings per share of $5.10, cash dividends per share of $2.05, and a market price per share of $65.55. The company's dividend yield equals:

Answer 1

The company's dividend yield equals: 3.13%

Step-by-step explanation:

Let's recall the formula of the dividend yield:

Dividend yield = Annual dividend/Current stock price

Replacing with the values provided, we have:

Dividend yield = 2.05/65.55

Dividend yield = 0.0313

Dividend yield = 3.13%

Interpretation:

Dividend yield is a way to compare the level of attractiveness of any dividend-paying stock. It shows an investor the yield he/she can expect on an annual basis by purchasing a stock.

Answer 2

3.13%

Step-by-step explanation:

The dividend yield refers to the payment by a company to its shareholders for their shareholding divided by current stock price of the company. This is usually expressed as a percentage and can be calculated for this question as follows:

Dividend yield = Dividends per share (DPS) ÷ Market price per share (MPS) = $2.05 ÷ $65.55 = 0.0313, or 3.13%.