In: Finance
If D0 = $3.78, g (which is constant) = 3.83%, and P0 = $59, what is the stock's expected dividend yield for the coming year?
Expected Div Yield = D1 / P0
D1 = D0 ( 1 + g )
= $ 3.78 ( 1 + 0.0383 )
= $ 3.78 * 1.0383
= $ 3.92
Expected Div Yield = D1 / P0
= $ 3.92 / $ 59
= 0.0665 I.e 6.65%
D0 = Just paid Div
D1 = Expected Div after 1 Year
g = Growth Rate
P0 = Price Today