The total return on a stock is equal to the:
A)dividend yield minus the capital gains yield.
B)dividend growth rate minus the dividend yield.
C)dividend yield plus the dividend growth rate.
D)growth rate of the dividends.
E)dividend divided by the sum of the dividend yield and capital gains yield.

Question

Quizplus · Accepted Answer

The total return on a stock is the sum of its dividend yield and its capital gains yield (the increase in the stock's price). The dividend yield is the annual dividend payment divided by the current stock price. The dividend growth rate is the rate at which the dividend payment is increasing over time. Therefore, the total return on a stock is equal to its current dividend yield plus its expected dividend growth rate.

The Total Return on a Stock Is Equal to The