Question

A stock currently sells for $63. The dividend yield is 3.6 percent and the dividend growth rate is 4.9 percent. What is the amount of the dividend to be paid in one year

Answer 1

Answer:

Dividend in one year from now= $ 2.38

Explanation:

Dividend yield =Dividend/ share price

DY= D/P

DY -3.6%, D- Annual dividend, P- share price

3.6% = D/63

0.036 × 63 = D

2.268  = D

With a growth rate of dividend of 4.9%

Dividend to paid in one from now= Annual dividend × (1 +dividend growth rate)

Dividend in one year from now = 2.268  ×  (1.049)=2.379132

Dividend in one year from now=  2.38