The next dividend payment by Mosby, Inc., will be $2.65 per share. The dividends are anticipated to maintain a 6.50 percent growth rate, forever. Assume the stock currently sells for $48.90 per share.
What is the dividend yield? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)
What is the expected capital gains yield? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)
|Capital gains yield||%|
Dividend yield= Dividend/Share price
= $2.65/ $48.90= 0.0542*100= 5.42%.
The capital gains yield is the same as dividend growth rate which is 6.50%.
Therefore, the capital gains yield is 6.50%.
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