A company paid $2.10 in dividends. Its earnings per share is $5.40, and its stock price is $120 per share. The dividend yield equals 38.9%.
$2.10/$120 = 1.75%

Question

Quizplus · Accepted Answer

To calculate the dividend yield, we need to divide the annual dividend per share by the stock price per share and then multiply the result by 100 to get a percentage.

So, if the company paid $2.10 in dividends, its annual dividend per share would be $2.10.

To find the number of shares, we can divide the total dividend paid by the earnings per share:

$2.10 ÷ $5.40 = 0.3889

Therefore, the company paid a dividend of $2.10 per share, and its dividend yield is:

$2.10/$120 x 100% = 1.75%

This means that the answer is actually A, and the statement "The dividend yield equals 38.9%" is false. The correct dividend yield is 1.75%.

A Company Paid $2