Question

Shares of common stock of the Samson Co. offer an expected total return of 12.00 percent. The dividend is increasing at a constant 6.70 percent per year. The dividend yield must be:

Answer 1

5.3%

Step-by-step explanation:

The shares of a common stock of Samson corporation offer an expected total return on 12.00 percent

The dividend is increasing at a constant 6.70 percent per year

Therefore, the dividend yield can be calculated as follows

Dividend yield= Required return + capital gains yield

= 12% - 6.70%

= 5.3%

Hence the dividend yield is 5.3%