Dividend Yield Analysis

See Also:
Dividends
Dividend Payout Ratio
Financial Ratios

Dividend Yield Analysis Definition

Dividend yield analysis indicates how much dividend a company paid to its investors relative to its stock price.

Formula

Dividend Yield ratio = Annual dividends per share ÷ Price per share

Calculation

For example a company pays annual dividend of $1 per share and its stock price is $20.

Dividend yield = 1 / 20 = 5%

In conclusion, investors can get $0.05 dividend for every dollar invested.

Applications

Dividend yield measures what percentage return a company pays out to its shareholders. In general, well-established companies may have higher dividend yield, while growing companies may have lower ones. For investors, a company with a high dividend yield may be a good investment if the rest of their fundamentals fall into line also.

Resources

For statistical information about industry financial ratios, please click the following website: www.bizstats.com and www.valueline.com.
Learn how you can be the best wingman with our free How to be a Wingman guide!