What annual return would buyer of stock expect in future

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Suppose that one year ago you bought 100 shares of SodaCo for $10 per share with the expectation of receiving a perpetual dividend of $1 per share. What was your expected annual percentage return on this investment?

Today, SodaCo announces that it will increase its annual dividend to $2 per share.

Upon announcement, the stock price rises to $20.

If you then sell the stock, what percentage return would you realize on your investment? What annual return would the buyer of your stock expect in the future? Why is there such a difference in returns?

Reference no: EM131276068

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