Quick questions on Shares, dividends and yield for HSC Maths Standard 2

A dividend is a cash payment a company pays to shareholders out of its profit. It is usually quoted per share, in dollars and cents.

Dividend yield expresses the dividend as a percentage of the share price:

Capital gain is the increase in share price over the holding period.

Total return combines income (dividends received) and capital gain or loss:

The price-earnings ratio compares the share price to the company's earnings per share:

In Australia, dividends are often franked (or partly franked), meaning the company has already paid corporate tax on the profit being distributed. This is examinable only in worded form (the question will tell you the cash amount); you do not need to compute the gross-up.

An investor buys $250$ Telstra shares at \3.80$each in 2024. By the end of the year, the price is$\$4.10$ and total dividends of \45$ were paid.

An investor buys $1000$ shares of a mining company at \8.20$. A year later the share price is$\$6.40$ and dividends total \200$.

A share trades at \60$and reports earnings per share of$\$3$. P/E $= \frac{60}{3} = 20$. The market is paying \20$for each$\$1$ of current annual earnings. :::

Use the original investment in the denominator for the total return percentage, unless the question explicitly says otherwise.

Dividend per share times number of shares gives total dividend received.

Include the sign in the total-return calculation.

P/E uses earnings per share. Yield uses dividend per share. Earnings is the company's profit; dividend is the cash paid out to shareholders (usually less than earnings).