Main Street Company paid out $2.30 in dividends per share of common stock and had earnings per share of $5.00 during 2019.The market price of the stock on December 31,2019 was $21.00 per share.There were 15,000 shares of stock outstanding for the entire year.The dividend yield as of December 31,2019 is closest to:

Question

Quizplus · Accepted Answer

Dividend yield = Dividends per share / Market price per share
Dividends per share = $2.30
Market price per share = $21.00
Earnings per share = $5.00
So, Dividend payout ratio = Dividends per share / Earnings per share = $2.30 / $5.00 = 0.46 or 46%
Dividend yield = Dividends per share / Market price per share = $2.30 / $21.00 = 0.1095 or 10.95% (rounded to two decimal places)
Therefore, the closest answer is B) 10.95%.

Main Street Company Paid Out $2