Dividend Yield

RECENT NEWS
The Economic Times  Jul 24  Comment 
Experts advise investors to build a portfolio around the dividend yield theme instead of betting on one or two stocks and remain invested for at least two to three years, says ET.
SeekingAlpha  Jul 10  Comment 
ByMarshall Hargrave: When investors think of high short interest stocks they rarely think of incomes plays. The five stocks below are some of the most shorted stocks in the market and yet produce the highest dividend yields. The key for these...
SeekingAlpha  Jul 8  Comment 
By Michael Grogan: If one stock pays a higher dividend yield than another, does that mean it pays a higher return overall? Looking at the yields vs. returns of the Dividend Aristocrats, it appears that higher yield actually results in a lower...
SeekingAlpha  Jun 20  Comment 
By Stanford Chemist: Introduction The repression of yields by the Fed's zero-interest rate policy has increased the popularity of a number of income securities, such as dividend growth stocks, REITs, MLPs, BDCs, royalty trusts, and high-yield...
SeekingAlpha  Jun 13  Comment 
ByHere To Learn: In my most recent article on Altria Group (MO), I called it "a great buy." At that time, it was trading at $34.71, with a dividend yield of 5.53%. This was just over four months ago, and a lot has changed. The stock has gone up by...
SeekingAlpha  May 1  Comment 
By Gemstone Equity Research: McDonald's Corporation (MCD) is a fast-food chain giant that operates 35,000 restaurants worldwide and 81% of these are franchised. The company recently released fairly weak results for the first quarter. McDonald's is...
SeekingAlpha  Apr 24  Comment 
By David Alton Clark: CenturyLink (CTL) has been on my radar screen for quite some time. The company is one of the largest telecommunications firms in the United States and a global leader in cloud infrastructure and hosted IT solutions for...
SeekingAlpha  Apr 22  Comment 
By Dan Strack: When dividend investors look for new stocks to add to their portfolio, valuations can often get put on the back burner in favor of dividend yield and growth. However, capital appreciation and dividend yield are attainable if you can...




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Dividend Yield is the percentage return a company pays out to its shareholders each year relative to its share price

Dividend yield is calculated as Annual Dividends per Share / Price per Share

This measurement tells you what percentage return a company pays out to shareholders in the form of dividends. Well-established companies tend to pay out a higher percentage, and with greater consistency, than do younger or more volatile companies. However, some companies choose to use the cash for re-investment in the company, potentially leading to a higher share price in the future. Therefore, it is not necessarily true that shareholders are better off investing in companies that pay higher dividends, though a consistently high dividend yield is often considered a sign of a stable, consistent, business.

It should be noted that companies do not announce a dividend yield per se, but rather a total dividend per share, the yield then being calculated from the current share price. Thus, a company with a particularly volatile stock price may see drastic swings in dividend yield despite a consistent dividend. As such, an increasing dividend yield over some period of time (quarterly, annually, etc.) while the dividend itself remains stable is often considered a sign of an artificially low (i.e. undervalued) stock price.

Examples

  • If XYZ company‚Äôs annual dividend is $1.50 per share and the stock is trading at $25, XYZ Dividend Yield is 6%. ($1.50 / $25 = 0.06)
  • If Company ABC announces annual dividends of $1.50 per share and the stock is trading at $45, ABC's Dividend Yield is 3.3%. ($1.50 / $45 = .033)

See Also

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