The next dividend payment by Wyatt, Inc., will be $2.90 per share. The dividends

Question

The next dividend payment by Wyatt, Inc., will be $2.90 per share. The dividends are anticipated to maintain a growth rate of 7.75 percent, forever. Assume the stock currently sells for $49.40 per share.

What is the dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What is the expected capital gains yield?

The next dividend payment by Wyatt, Inc., will be $2.90 per share. The dividends are anticipated to maintain a growth rate of 7.75 percent, forever. Assume the stock currently sells for $49.40 per share.

Explanation / Answer

1) The formula to calculate dividend yield = Dividend for the period / Price of the stock

Dividend yield = [$2.90 / $49.40] * 100

Dividend yield = 5.87%

2) The formula to calculate capital gains yield = [Future share price of stock

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