Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year. What is the dividend yield?

A. 3.75 percent

B. 4.20 percent

C. 4.55 percent

D. 5.25 percent

E. 6.60 percent

We have been given that Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year.

We will use total return formula to answer our given problem.

[tex]\text{Total return}=\text{Dividend yield}+\text{Growth rate}[/tex]

Upon substituting our given values in above formula, we will get:

[tex]9.2\%=\text{Dividend yield}+2.6\%[/tex]

[tex]\text{Dividend yield}=9.2\%-2.6\%[/tex]

[tex]\text{Dividend yield}=6.6\%[/tex]

Therefore, the dividend yield would be 6.60% and option E is the correct choice.

Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year. What is the dividend yield? A. 3.75 percent B. 4.20 percent C. 4.55 percent D. 5.25 percent E. 6.60 percent

Respuesta :

Otras preguntas

Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year. What is the dividend yield?

A. 3.75 percent

B. 4.20 percent

C. 4.55 percent

D. 5.25 percent

E. 6.60 percent