Question

Grapefruit, Inc. provides the following information for 20X8: Net income $39,000 Market price per share of common stock $20/share Dividends paid $0.75/share Common stock outstanding at Jan. 1, 2018 110,000 shares Common stock outstanding at Dec. 31, 2018 155,000 shares The company has no preferred stock outstanding. Calculate the dividend yield for common stock.

Answer 1

Answer: 3.75%

Step-by-step explanation:

Dividend yield = Annual dividend / Common stock market price

Annual dividend = 0.75 per share

Common stock market price = $20 per share

Dividend yield = 0.75 / 20

= 3.75%