Question

You purchased a stock at a price of $56.04. The stock paid a dividend of $2.31 per share and the stock price at the end of the year is $62.59. What was the dividend yield

Answer 1

The dividend yield for the given stocks is 4.12%.

What is dividend yield?

• A financial ratio (dividend/price) called the dividend yield, which is stated as a percentage, demonstrates how much a firm pays in dividends annually in relation to the price of its stock.
• The price/dividend ratio is the counterpart of the dividend yield.
• The dividends from real estate investment trusts (REITs), master limited partnerships (MLPs), and business development corporations (BDCs) are taxed more heavily than the typical dividend.
• The dividend yield of a stock may be rising as a result of a dropping stock price, therefore it's crucial for investors to remember that greater dividend yields do not always signal appealing investment prospects.

Solution:

We know that dividend yield = $\frac{Dividend per share}{Share price}$ × 100

dividend yield = $\frac{2.31}{56.04}$ × 100 = 4.12%

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