Question

Suppose a stock had an initial price of $87 per share, paid a dividend of $2.15 per share during the year, and had an ending share price of $98.

a) Compute the percentage total return

b) What was the dividend yield?

c) What was the capital gains yield?

Answer 1

Given :

Current Price (Po) = $87

Dividend received during the year (D) = $2.15

Year end Price (P1) = $98

a) Calculation of Percentage total return

Percentage total return = (D + P1 - Po) / Po *100

Percentage total return = ($2.15 + $98 - $87)/ $87 *100 = 13.15 / 87 *100 = 15.1149 %

Percentage total return = 15.11 %

b) Calculation of Dividend Yield

Dividend Yield = D / Po *100

Dividend Yield = $2.15 / $87 *100 =  2.4713%

Dividend yield = 2.47%

c) Calculation of Capital gain yield

Capital gain yield = (P1 - Po) / Po *100

Capital gain yield = ($98-$87) / $87 *100 = 12.6437%

Capital gain yield = 12.64%