A stock pays a $1 dividend and rises in price from $50 to $51. What is stock holder’s total percentage return?

Question

A stock pays a $1 dividend and rises in price from $50 to $51. What is stock holder’s total percentage return?

8%

4%

5%

-2%

Answer 1

Incomplete question because you need to tell how often the dividend is issues in a year (quarterly, bi yearly, yearly)??

All options discussed below:

Scenario 1:

Assuming Yearly dividend--

Annual return will be: 4% ($1 dividend + $1 appreciation)

Scenario 2:

Assuming Bi yearly dividend--

Annual return will be: 6% ($2 dividend + $1 appreciation)

Scenario 3:

Assuming quarterly dividend--

Annual return will be: 10% ($ 4 dividend + $1 appreciation)

From the answer options above, it seems like you wanted to know only for the yearly dividend option......

....so ANSWER IS: 4%

Now gimme 10 point for best answer :-)