Question

The stock of ABC Company has a current market price of $75. The corporation has paid a dividend of $3.75 over the last 12 months and has earnings per share of $5. What is the dividend yield?

Answer 1

Answer:

The dividend yield is 5%

Explanation:

For computing the dividend yield ratio, we have to use the formula pf dividend yield ratio which is shown below:

Dividend yield ratio = Annual dividend ÷ Stock market price

where,

The Annual dividend is $3.75

And, the stock price is $75

Now put these values to the above formula

So, the value would be equal to

= $3.75 ÷ $75

= 0.05

= 5%

Hence, the dividend yield is 5%