Question

Your neighbor tells you that it is best to focus on dividends rather than capital appreciation...

  1. Your neighbor tells you that it is best to focus on dividends rather than capital appreciation when investing in stocks. Do you agree or disagree? Why? Name one example of both a high dividend paying stock and a capital appreciation stock (include their ticker symbols).

Homework Answers

Answer #1

The return on a stock comes both from dividend and capital gains. Hence one cannot be selected over the other and both must be kept in consideration. The holding period retunr on a stock is computed as (Dividend + Capital gain)/initial investment

Example of high dividend paying stock is Target Corp (TGT) . It paid dividend of $0.64 per stock in Feb 2019. It has been consistently paying the dividend over the past few quarters.

Example of capital appreciation stock is Nike (NKE). The price of the stock increased in the past 1 year from $67.49 in Feb 2018 to $84.87

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