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If a company pays $4.90 dividend at the end of the year, and the stock price is $70, and the growth rate is 6% can you tell me what the required rate of return would be using the dividend yield and growth rate (capital gains)?

  • Math -

    The REQUIRED rate is an arbitrary quantity, and depends upon the long term track record and business prospects of the company, as well as current bond market yields. In a word, it depends upon investor sentiment.

    You have quoted ACTUAL stock performance data. It indicates that the current total return (dividends plus capital gain) is 6% + 4.90/70 = 13%

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