Question

CPJ Industries has a share price today of $22.39. If CPJ is expected to pay a dividend of $0.69 per share this coming year, and the stock price is expected to grow to $22.76 by the end of the year.

a. What is CPJ’s expected dividend yield?
b. What is CPJ’s expected capital gain yield?
c. What is CPJ’s expected total return?

Answer 1

a. The  expected dividend yield = Annual Dividend / Issue Price

= $ 0.69 / $ 22.39 * 100

= 3.081732916%

Hence the correct answer is 3.08%

b. The expected capital gain yield = (Price at End - Price at Beginning) /Price at Beginning * 100

= ( $ 22.76 - $ 22.39) / $ 22.39 *100

= 1.652523448%

Hence the correct answer is  1.65 %

c. The expected total return = [( Price at End - Price at Beginning) + Dividend ] /Price at Beginning * 100

= [ ( $ 22.76 - $ 22.39) + $ 0.69 ] / $ 22.39 * 100

= 4.73%

Hence the correct answer is 4.73%

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