Math / Numbers & Operations

QuestionWhat is the dividend yield on Stock $A$ that sells at $\$ 20 /$ share, when Company A pays a quarterly dividend of $\$ 0.15$ per share?

Studdy Solution

STEP 1

1. The dividend yield is calculated as the annual dividend payment divided by the current stock price.
2. The quarterly dividend payment is given, so the annual dividend payment is four times the quarterly dividend.

STEP 2

1. Calculate the annual dividend payment.
2. Use the annual dividend payment and the current stock price to calculate the dividend yield.

STEP 3

First, determine the annual dividend payment by multiplying the quarterly dividend payment by 4.
$\text{Annual Dividend} = \text{Quarterly Dividend} \times 4$ $\text{Annual Dividend} = 0.15 \times 4$ $\text{Annual Dividend} = 0.60$

STEP 4

Next, calculate the dividend yield by dividing the annual dividend payment by the current stock price.
$\text{Dividend Yield} = \frac{\text{Annual Dividend}}{\text{Stock Price}}$ $\text{Dividend Yield} = \frac{0.60}{20}$ $\text{Dividend Yield} = 0.03$

STEP 5

Convert the dividend yield to a percentage.
$\text{Dividend Yield Percentage} = 0.03 \times 100$ $\text{Dividend Yield Percentage} = 3\%$
The dividend yield on Stock $A$ is $3\%$ .

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