Rhea owns shares in Riko Corp. Currently, the market price of the stock is $36.34. The company expects to grow at a constant rate of 6 percent for the foreseeable future. Its last dividend was worth $3.25. Rhea’s required rate of return for such stocks is 16 percent. She wants to find out whether she should sell her shares or add to her holdings. Calculate the value of this stock and advise Rhea on what she should do

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Q: am. 120.

A:

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Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.