Silicon Ltd. has a current stock price of $58.2 per share, is expected to pay an annual dividend of $2.5 in one year, and its expected price right after paying that dividend is $58. What is the expected dividend yield for Silicon Ltd.? (State your answer in percentage terms and round to 2 decimal places, e.g. put 4.59 if your answer is 0.04586384)
Question
Silicon Ltd. has a current stock price of 2.5 in one year, and its expected price right after paying that dividend is $58. What is the expected dividend yield for Silicon Ltd.? (State your answer in percentage terms and round to 2 decimal places, e.g. put 4.59 if your answer is 0.04586384)
Solution
The dividend yield is calculated by dividing the annual dividend by the current stock price.
So, for Silicon Ltd., the dividend yield would be 58.2 = 0.04296.
To convert this to a percentage, we multiply by 100, which gives us 4.296%.
Rounding to two decimal places, the expected dividend yield for Silicon Ltd. is 4.30%.
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