Nicer Corporation reported net income of $50,000 in the current year. There are 10,000 shares of $100 par, 6% preferred stock and 50,000 shares of $2 par common stock outstanding. During the year, Nicer paid the preferred stockholders a $6 per share dividend and also paid $30,000 to common shareholders. The market value of Nicer’s stock is preferred stock, $95, and common stock, $5.00.

a. Calculate Nicer’s dividend yield.
b. Why does the dividend yield vary widely across firms?

Question

a. Calculate Nicer’s dividend yield.
b. Why does the dividend yield vary widely across firms?

Quizplus · Accepted Answer

The Answer of Nicer Corporation reported net income of $50,000 in the current year.  There are 10,000 shares of $100 par, 6% preferred stock and 50,000 shares of $2 par common stock outstanding.  During the year, Nicer paid the preferred stockholders a $6 per share dividend and also paid $30,000 to common shareholders.  The market value of Nicer’s stock is preferred stock, $95, and common stock, $5.00.

a. Calculate Nicer’s dividend yield.
b. Why does the dividend yield vary widely across firms?

Nicer Corporation Reported Net Income of $50,000 in the Current