Question

Fred and Torrie Jones are a retired couple looking for income. They are currently rebalancing their portfolio of stocks to include more with high dividends. Fred and Torrie will be most interested in which of the following? a.Contribution margin ratio b.Price-earnings ratio c.Dividend payout ratio d.Current ratio e.Dividend yield

Answer 1

Answer: E

Dividend yield

Explanation:

Dividend yield is a company's total annual dividend payments divided by its number of shares. Since Fred and Torrie are more interested in how much dividends their investment will yield, one metric that will prove useful is the dividend yield per share. Contribution margin and current ratio are about how well the company is being run and does not directly reflect divided. Dividend payout ratio has no relationship between invested funds and dividend, it only compares dividend against reported profit.

Answer 2

Answer:

E) Dividend Yield

Explanation:

Dividend yield calculated by dividing the dividends per share by stock price and a higher yield is usually good so since they are focusing on the high dividends they will be most interested in this ratio as it will tell them how much dividends they will get