Cost of Preferred Stock
Computes the cost of capital of a preferred stock: the fixed annual dividend divided by the stock's market price, as a percentage. Since preferred stock usually pays a constant dividend, it behaves like a perpetuity, and its cost is the yield on that dividend. This figure goes into the WACC calculation as the cost of the preferred-capital slice. Enter the annual dividend and the preferred stock's price.
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Cost of Preferred Stock
Computes the cost of capital of a preferred stock: the fixed annual dividend divided by the stock's market price, as a percentage. Since preferred stock usually pays a constant dividend, it behaves like a perpetuity, and its cost is the yield on that dividend. This figure goes into the WACC calculation as the cost of the preferred-capital slice. Enter the annual dividend and the preferred stock's price.
What preferred-stock capital costs
For a company, every source of capital has a price. Preferred stock sits midway between debt and common equity: it pays a generally fixed dividend, with no claim to growth, but with priority over common shareholders. Since that dividend is usually constant, computing the cost of this slice of capital is straightforward.
Because it behaves like a perpetuity, the cost of preferred stock is the annual dividend divided by the stock's market price. A preferred paying 5 per year and trading at 50 has a cost of 10%. This number goes into the WACC, the weighted average cost of capital, representing how much the company pays for the money it raised via preferred shares.
Enter the preferred's annual dividend and its market price. The tool returns the cost as a percentage. In a finer analysis, issuance costs are subtracted from the price to get the net cost; here we use the direct version, enough for most WACC estimates.
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Computes the capital gains yield of an asset: the percentage price appreciation between the start and end of the period, (P1 − P0)/P0. It's the part of the total return that comes from the price change, not counting dividends — added to the dividend yield, it gives the stock's total return. It serves to separate how much of the gain came from appreciation and how much from income. Enter the starting price and the ending price.
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The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.