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You are comparing the dividend attractiveness of two utility companies, PowerGen and ElectricCo, for income-oriented investors. Requirements: PowerGen pays an annual dividend of $2 per

You are comparing the dividend attractiveness of two utility companies, PowerGen and ElectricCo, for income-oriented investors.

Requirements:

  1. PowerGen pays an annual dividend of $2 per share, and its market price per share is $40. ElectricCo pays an annual dividend of $2.50 per share, and its market price per share is $50.
  2. Calculate the dividend yield for both companies.
  3. Discuss which company offers a higher dividend yield to investors.

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