lets say at the start of the year, a stock is worth $1.1. during the year the company makes a 5:4 split. at the end of the year they give dividends of $0.06 and the price of the stock is now $0.96. what is the yield?
2007-07-20 12:57:48 · 3 answers · asked by Renato S 1 in Business & Finance ➔ Investing
Yield = dividend / price
$0.06 / $0.96 = 6.25%
Yield exists at a point in time. Your cost basis and history of splits is not relevent.
The person with "MBA" in his screen name provided a series of calculations which I'm sure are wonderfully accurate and yet WRONG. The question was about "yield" and the calculations give "total return". As I used to tell my students before a test, "You will do better if you READ THE QUESTION".
2007-07-20 13:23:31 · answer #1 · answered by Ted 7 · 0⤊ 1⤋
I recommend:
So, a 5:4 split means you get 5 shares for every 4 you own. Value of the stock you own does not change, but the share price does.
$1.1 x 4shrs = $4.40
$4.40 / 5 shrs = $0.88 / shr
Now the cost basis of each share is $0.88
$0.96 - $0.88 = $0.08 (gain from share price)
$0.08 + $0.06= $0.14 (gain from share price & dividend)
$0.14 / $0.88 = 15.909% ~ 15.91%
capiche?
Just Be!
2007-07-20 20:02:18 · answer #2 · answered by MBA Don 4 · 1⤊ 1⤋
If you don't sell the stock yet, the dividend yield is 5.5% from your purchase.
Step-by-Step Stock Investing for Beginners
http://www.stock-investment-made-easy.com/
http://answers.yahoo.com/question/index;_ylt=As61UR4DWXZnVDIVK6se6XLty6IX?qid=20070714214424AA7sRG1&show=7#profile-info-KIrPXr6Xaa
2007-07-20 20:18:07 · answer #3 · answered by BigBen 5 · 0⤊ 1⤋