What's the dividend yield capital gains yield and the expected rate return of the stock with preferred stock at eight dollar annual dividend to be paid in perpetuity a discount rate is twelve percent?

Answer 1

* 1 Preferred share dividend yield * 2 Common share dividend yield * 3 History * 4 Related Reference * 5 Dow Industrials * 6 S&P 500 * 7 See also * 7.1 Lists * 8 External links Dividend payments on preferred shares are stipulated by the prospectus. The company will typically refer to a preferred share by its initial name which is the yield on its original price --- for example, a 6% preferred share. However, the price of preferred shares varies according to the market so the yield based on the current price fluctuates. Owners of preferred shares calculate multiple yields to reflect the different possible outcomes over the life of the security. * current yield is the $Dividend / Pfd share current price. * Since the share may be purchased at a lower (higher) cost than its final redemption value, holding it to maturity will result in a capital gain (loss). The annualized rate of gain is calculated using the Present value of a dollar calculation. ('PV' is the current stock price. 'FV' is the redemption value. 'n' is the number of years to redemption. Solve for the interest rate 'r'.) The yield to maturity is the sum of this annualized gain (loss) and the current yield. * There are other possible yields discussed at Yield to maturity. Unlike preferred stock, there is no stipulated dividend for common stock. Instead, dividends paid to holders of common stock are set by management, usually in relation to the company's earnings. There is no guarantee that future dividends will match past dividends or even be paid at all. Due to the difficulty in accurately forecasting future dividends, the most commonly-cited figure for dividend yield is the current yield which is calculated using the following formula: For example, take a company which paid dividends totaling $1 last year and whose shares currently sell for $20. Its dividend yield would be calculated as follows: Rather than use last year's dividend, some try to estimate what the next year's dividend will be and use this as the basis of a future dividend yield. Such a scheme is used for the calculation of the FTSE UK Dividend+ Index[1]. It should be noted that estimates of future dividend yields are by definition uncertain.