The current dividend yield on CD\'s common stock is 1.89 percent. The company just paid an annual dividend of $1.56 and announced plans to pay $1.70 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock
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The required rate of return on the stock of CD will be 10.86%.
What is rate of return?
The capital gains made from investment in such asset class(s) over a specific period is the rate of return of such investment. In the above case, the rate of return using the given values will be,
Hence, the required rate of return is calculated as 10.86%.
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