If D0 = $3.78, g (which is constant) = 3.83%, andP0 = $59, what is...

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?

Solutions

Expert Solution

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

jeff jeffy answered 2 years ago

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