Question

Omega Healthcare Investors (ticker symbol, OHI) pays a dividend on its Series B preferred stock of...

Omega Healthcare Investors (ticker symbol, OHI) pays a dividend on its Series B preferred stock of $0.539 per quarter. If the price of Series B preferred stock is $25 per share:
1. What quarterly rate of return does the market require on this stock?
2. What is the annual rate of return for this stock?
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Answer #1
Formula to calculate quarterly rate of return
Quarterly rate of return = Quarterly dividend/Preferred stock price
Quarterly rate of return $0.539/$25
Quarterly rate of return 2.16%
Thus, the quarterly rate of return is 2.16%
Formula to calculate annual rate of return
Annual rate of return Annual dividend/Preferred stock price
Annual rate of return (0.539*4)/25
Annual rate of return 8.62%
Thus, the annual rate of return is 8.62%
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