Calculating Dividend Yield?

Question

Hello, Can somebody confirm that I am correctly calculating the dividend yield? I'm in intro to finance this semester and want to make sure I'm doing it correctly.

Scenerio: You purchase 200 shares of stock at a price of 36.72 per share. Over the last year, you have received total dividend income of $322. What is the divident yield?

This is how I calculated it. I took (200 *36.72=7344)

Then 322 / 7344 = 4.3845% Dividend Yield

Thanks.

Answer 1

Yep, that's what I get too.

Answer 2

You got to the correct answer but not in the normal formulaic manner.

Dividend Yield =
100 * Annual Dividend Per Share / Stock Cost Basis

In your example:

Annual Dividend Per Share = 322 / 200 = 1.61

Dividend Yield = 100 * 1.61 / 36.72 = 4.3845 %

Good luck with those finance courses.

Answer 3

Actually you guys are a little incorrect. You are thinking about your return (profit) from dividends. When you talk about dividend yield you use the current share price, not the price you bought it for. The share price fluctuates and the correct (and the only useful way to view) dividend yield is to take the trailing 12 months dividends and divide them by the current share price, example:

Quarterly dividend=$0.15
Current share price = $10

equation:
4(4 quarters in a year) x 0.15=.60
.60/10= .06
Dividend yield = 6%
Now if the share price drops to $5 your new dividend yield is:
.60/5= .12 or 12%

Answer 4

You are correct.