Shoreline Foods pays a constant annual dividend of $1.60 a share and currently sells for $28.50 a share.What is the rate of return?

Question

Quizplus · Accepted Answer

To calculate the rate of return, we use the formula:
Rate of return = (Annual Dividend / Stock Price) + Dividend Growth Rate
Since the dividend is constant, the dividend growth rate is 0.
So, Rate of return = (1.6 / 28.5) + 0 = 0.0561 or 5.61%.
Therefore, the best choice is B.

Shoreline Foods Pays a Constant Annual Dividend of $1