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16 December, 07:15

Home Services common stock offers an expected total return of 14.56 percent. The last annual dividend was $2.27 a share. Dividends increase at a constant 2.1 percent per year. What is the dividend yield

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  1. 16 December, 09:13
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    Dividend yield=10.3%

    Explanation:

    Mv=Do (1+g) / (Ke-g)

    MV=?

    Do=2.27

    g=2.1%

    Ke=14.56%

    Mv=2.27 (1+2.1%) / (14.56%-2.1%)

    MV=2.75 / (12.46%)

    MV=$22.1

    Dividend yield=dividend per share/share price per share

    Dividend yield=2.27/22.1

    Dividend yield=10.3%
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