The next dividend payment by Dizzle, Inc., will be $2.55 per share. The dividend

Question

The next dividend payment by Dizzle, Inc., will be $2.55 per share. The dividends are anticipated to maintain a growth rate of 6 percent, forever. Assume the stock currently sells for $48.70 per share.

What is the dividend yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Dividend yield             %

What is the expected capital gains yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Capital gains yield             %

Explanation / Answer

Dividend yield=Annual dividend/Current price

=(2.55/48.70)=5.24%(Approx)

Capital gains yield=Growth rate=6%

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