The next dividend payment by Hillside Markets will be $2.35 per share. The dividends are anticipated to maintain a 4.5 percent growth rate forever. The stock currently sells for $70 per share. What is the dividend yield?

Question

Quizplus · Accepted Answer

Dividend yield is the annual dividend payment divided by the current stock price.

First, we need to find the expected annual dividend payment:
Expected dividend = Current dividend * (1 + growth rate) = $2.35 * (1 + 0.045) = $2.45

Then, we can calculate the dividend yield: 
Dividend yield = Expected annual dividend / Current stock price = $2.45 / $70 = 0.035 or 3.36%

Therefore, the answer is B.

The Next Dividend Payment by Hillside Markets Will Be $2