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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 58.2pershare,isexpectedtopayanannualdividendof58.2 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)

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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 2.5/2.5 / 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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