Question

You bought a stock one year ago for ​$51.02 per share and sold it today for $57.51 per share. It paid a $1.49 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?

Answer 1

a) Calculation of realized return:

Realized return= (selling price-purchase price+dividend)/purchase price*100

Realized return= (57.51-51.02+1.49)/51.02*100= 15.64

Realized return= 15.64%

b) calculation of return from dividend yield:

Return from dividend yield= Dividend/purchase price*100

Return from dividend yield= 1.49/51.02*100= 2.92%

Calculation of return from capital gain yield:

Return= (selling price-purchase price) purchase price*100

Return= (57.51-51.02)/51.02*100= 12.72%