ACCA Applied Skills · Financial Management · Financial objectives and relationship with corporate strategy
Ketan Co's shares were priced at $4.00 at the start of the year and $4.20 at the end. It paid a dividend of $0.30 per share during the year. What was the total shareholder return for the year?
Total shareholder return is 12.5%. It is the capital gain of $0.20 plus the dividend of $0.30, giving $0.50, divided by the opening share price of $4.00. Using only the capital gain or only the dividend understates the return.
- A5.0%
- B7.5%
- C12.5%Correct
- D7.1%
Explanation
Total shareholder return = (capital gain + dividend) / opening price = (0.20 + 0.30) / 4.00 = 12.5%. The 5.0% figure is capital gain only, omitting the dividend. The 7.5% figure is the dividend yield only.
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