ACCA Strategic Professional · Advanced Financial Management · Strategic business and financial planning for multinational organisations
Hartley plc has a share price of $4.00 at the start of the year and pays a dividend of $0.20 per share at the end of the year, when the share price is $4.40. What is the total shareholder return for the year?
Total shareholder return is 15.0%. It combines the capital gain of $0.40 (4.40 minus 4.00) and the dividend of $0.20, giving $0.60, divided by the opening share price of $4.00. Counting only the capital gain would understate the return at 10%.
- A10.0%
- B5.0%
- C15.0%Correct
- D12.5%
Explanation
Total shareholder return = (capital gain + dividend) / opening price = (0.40 + 0.20)/4.00 = 15.0%. Using only the capital gain gives 10.0%, and using only the dividend yield gives 5.0%.
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