Gilbert, Inc. has just paid a dividend of $40.00 per share. You expect the dividends to grow at 15% then 8% for the next two years. Thereafter, you expect the dividend growth to slow to a perpetual 3.5% per annum. If the stock is currently priced to earn you a 9.5% per annum return, what is the company's expected dividend yield for the year ahead? Important note: Enter your answer as a percentage rounded to two decimal places and DO NOT include the percentage sign. In other words, for 8.73% you are required to enter 8.73 only.

Answer rating: 100% (QA)

To calculate the expected dividend yield for the year ahead we can use the dividend discount model D... View the full answer