Calculate Current Annual Dividend - Definition, Formula and Example

Definition:

Current Annual Dividend earned from a share is exactly the firm's entire annual dividend payment segregated by its dividend per share or market capitalization.

Formula :

Where, k is Required rate of return g is Constant Growth rate

Example :

Raj's current price of a share is 100000, his constant growth rate (g) is 8.9109% and his required rate of return is 10%. Compute his Current Annual Dividend?

Given,

Constant Growth Rate (g) = 8.9109% Current Price = 100000 Required Rate of Return (k) = 10 %

To find,

Current Annual Dividend (CAD)

Solution:

CAD = 100000 * [(10% - 8.9109%) / (1 + 8.9109%)] CAD = 100000 * [(0.1 - 0.089109) / (1 + 0.089109)] CAD = 100000 * (0.010891 / 1.089109) CAD = 100000 * 0.00999991736 CAD = 999.991736 (or) 1000