You bought a stock one year ago for $ 50.00 per share and sold it today for $ 55.00 per share. It paid a $ 1.00 per share dividend today.

a. What was your realized return?

b. How much of the return came from dividend yield and how much came from capital gain?

a. 12%

b. 2% and 10%

Explanation:

a. The computation of the realized return is shown below:

= { (Ending share price - initial price) + Dividend} : (Initial price) * 100

= {$1 + ($55 - $50) } : $50

= 12%

b. The computation of the dividend yield and the capital gain is shown below:

Dividend yield

= (Dividend) : (initial price) * 100

= $1 : $50 * 100

= 2%

For capital gain yield:

= (Ending share price - initial price) : (Initial price) * 100

= ($55 - $50) : ($50) * 100

= $5 : $50 * 100

= 10%