Question

Consider four different stocks, all of which have a required return of 20 percent and a most recent dividend of $5.10 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, 0 percent, and –5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 9 percent growth rate thereafter.

  

What is the dividend yield and capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "0" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 1 decimal place, e.g., 32.1.)

	Dividend yield				Capital gains yield
Stock W		%		Stock W		%
Stock X		%		Stock X		%
Stock Y		%		Stock Y		%
Stock Z		%		Stock Z		%

Answer 1