In: Accounting
Dividend Yield
The market price for Macro Corporation closed at $40.54 and $34.50 on December 31, current year, and previous year, respectively. The dividends per share were $0.60 for current year and $0.69 for previous year.
a. Determine the dividend yield for Macro on December 31, current year, and previous year. Round percentages to two decimal places.
Current year | % |
Previous year | % |
b. The dividend yield from the previous year to the current year. This is a result of a(n) in the dividend relative to stock price.
a)
Dividend Yield = Dividend per share /Current Market Price per Share
Hence,
Dividend Yield for Current year = $0.60 / $40.54 =
1.48%
Dividend Yield for Previous year = $0.69 / $34.50 = 2%
b)
The dividend yield decreases from the previous year to the current year. This is a result of a percentage Decrease in the dividend relative to stock price.
Explanation
Percentage increase in dividend = (Current year dividend - Previous
year dividend) / Previous year dividend
= ($0.60 - $0.69)/ $0.69
= (13.04%)
Percentage increase in market Price
= (Current year market price - Previous year market price) /
Previous year market price
= ( $40.54 - $34.50 ) / $34.50
= 17.51 %
We can see Percentage increase in dividend is in minus means
dividend decreases while market price is increases from previous to
current year.