Question

One year ago, you purchased 500 shares of stock at a cost of $9500. The stock paid an annual dividend of $2.20 per share. Today, you sold those shares for $25.5 each. What is the capital gains yield on this investment? What was your dividend yield on this investment? And what is total dollar return? What is Percentage return?

Answer 1

Cost of stock at time of purchase (P0) ($9,500 / 500) = $19

Cost of stock today (P1) = $25.50

Capital gain yield = [(P1 - P0) *100] / P0 = [($25.50 - $19) *100] / $19

Capital gain yield = 0.3421 or 34.21%

Capital gain yield = 34.21%

Dividend Yield = Dividend / P0 = $2.20 / $19 = 0.1158 or

Dividend Yield = 11.58%

Total percentage return = Capital gain yield + Dividend Yield = 34.21% + 11.58%

Total percentage return = 45.79%

Total dollar return = [$2.20 + ($25.40 - $19)] * 500 shares = $4,350

Total dollar return = $4,350