Silicon Ltd. has a current stock price of $60.6 per share, is expected to pay an annual dividend of $2.6 in one year, and its expected price right after paying that dividend is $49. What is the expected dividend yield for Silicon Ltd.?
Question
Silicon Ltd. has a current stock price of 2.6 in one year, and its expected price right after paying that dividend is $49. What is the expected dividend yield for Silicon Ltd.?
Solution
The dividend yield is calculated by dividing the annual dividend by the current stock price.
Step 1: Identify the annual dividend. In this case, it is $2.6.
Step 2: Identify the current stock price. In this case, it is $60.6.
Step 3: Divide the annual dividend by the current stock price.
So, the calculation would be:
60.6 (current stock price) = 0.0429
To express this as a percentage, we multiply by 100.
0.0429 * 100 = 4.29%
So, the expected dividend yield for Silicon Ltd. is 4.29%.
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