Dry Dock Marina is expected to pay an annual dividend of $1.58 next year. The stock is selling for $18.53 a share and has a total return of 9.48 percent. What is the dividend growth rate?

Question

Quizplus · Accepted Answer

The dividend growth rate can be calculated using the formula for total return: Total Return = (Dividend Yield) + (Growth Rate). The dividend yield is $1.58 / $18.53 = 0.0853 or 8.53%. The total return is 9.48%, so the growth rate is 9.48% - 8.53% = 0.95%.

Dry Dock Marina Is Expected to Pay an Annual Dividend