Shares of common stock of the Samson Co. offer an expected total return of 12.8 percent. The dividend is increasing at a constant 5.1 percent per year. The dividend yield must be:

7.70 percent.

5.10 percent.

12.80 percent.

2.51 percent.

17.90 percent.

Question

Business

Guest

28 May, 18:15

Shares of common stock of the Samson Co. offer an expected total return of 12.8 percent. The dividend is increasing at a constant 5.1 percent per year. The dividend yield must be:

7.70 percent.

5.10 percent.

12.80 percent.

2.51 percent.

17.90 percent.

+4

Answers (1)

Know the Answer?

Julien Madden · Answer 1

A. 7.70 percent.

Explanation:

Generally, dividend yield is the annual dividend per share divided by the stock price per share. However, in finance, dividend yield is the difference between the expected total return and dividend growth rate per year.

Therefore, Dividend yield = Expected total return - Dividend growth rate (Increasing)

Dividend yield = 12.8% - 5.1%

Hence, Dividend yield = 7.70%

Therefore, option A is the answer.

Shares of common stock of the Samson Co. offer an expected total return of 12.8 percent. The dividend is increasing at a constant 5.1 percent per year. The dividend yield must be:7.70 percent.5.10 percent.12.80 percent.2.51 percent.17.90 percent.

Shares of common stock of the Samson Co. offer an expected total return of 12.8 percent. The dividend is increasing at a constant 5.1 percent per year. The dividend yield must be:

7.70 percent.

5.10 percent.

12.80 percent.

2.51 percent.

17.90 percent.