Series 79: 3.5.4. Dividend Yield And Dividend Payout Ratio

3.5.4. Dividend Yield and Dividend Payout Ratio

Dividend yield measures the return to shareholders in terms of dividends paid relative to share price. Unlike the profitability measures already discussed, dividend yield does not focus on a company’s earnings. Instead, it expresses the return per dollar invested that flows back to investors in the form of dividends. Dividend yield is an important metric for investors who focus on stable, income-producing stocks. It is usually expressed as a percentage. Dividend yield is calculated as follows:

Some analysts prefer to use the most recent quarterly dividend multiplied by four in place of the annual dividend. Alterna