Question

Shares of common stock of the Samson Co. offer an expected total return of 13.0 percent. The dividend is increasing at a constant 5.4 percent per year. The dividend yield must be:_______a. 18.40 percent. b. 7.60 percent. c. 13.00 percent. d. 2.41 percent. e. 5.40 percent.

Answer 1

Answer:

b. 7.60 percent.

Explanation:

Dividend yield = expected return - dividend growth rate

• expected return = 13%
• dividend growth rate = 5.4%

dividend yield = 13% - 5.4% = 7.6%

Dividend yield is a financial metric that measures the rate of return that a stockholder receives every time a dividend is distributed. You can also calculate it by dividing dividends received by stock price.