Question

Suppose a stock had an initial price of $74 per share, paid a dividend of $1.65 per share during the year, and had an ending share price of $83. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Dividend yield, capital gains yield, and total return as a percentage are, - 8.29 percent, 1.46 percent, and - 9.75 percent respectively.

The computations are shown below:

1. For total return:

= {(Ending share price - initial price) + Dividend} ÷ (Initial price) × 100

= {($74 - $82) + $1.20} ÷ ($82) × 100

= - $6.80 ÷ $82 × 100

= - 8.29%

2. Dividend yield:

= (Dividend) ÷ (Initial price) × 100

= $1.20 ÷ $82 × 100

= 1.46%

3. For capital gain yield:

= (Ending share price - initial price) ÷ (Initial price) × 100

= ($74 - $82) ÷ ($82) × 100

= - $8 ÷ $82 × 100

= - 9.75%

What is Annual Dividend?

An annual dividend is a payment made by an insurance firm to its policyholders each year in the insurance sector. Annual dividends are most frequently given out in combination with plans that provide long-term disability insurance and permanent life insurance.

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