Question

In: Finance

Current Yield

If a stock pays a dividend of $50 and its market price is $950. What is the current yield of that stock?

Solutions

Expert Solution

Here,

Annual Dividend = $55

Market Price of Stock = $950

The current yield will be calculated by dividing the annual dividend by its market price. 

The terms used in the formula

D - Annual Dividend

P - Market Price

\( \begin{align}\rm\text{Current Yield} &= \frac {D}{P}\\ &= \frac {\$50}{\$950}\\ &= 0.0526 \ or \ 5.26\% \end{align} \)

Hence, the current yield of a stock is 5.26%


The Current Yield is 5.26%

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