dividend yield

(redirected from Price-Dividend Ratios)

Dividend yield (Funds)

Indicated yield represents return on a share of a mutual fund held over the past 12 months. Assumes fund was purchased a year ago. Reflects effect of sales charges (at current rates), but not redemption charges.

Dividend yield (Stocks)

Indicated yield represents annual dividends divided by current stock price.

Dividend Yield

The dividend per share that a company pays divided by the share price. This is reported on the financial statements of a publicly-traded company. It is a measure of the return an investor makes for every dollar invested in the company. If there are no capital gains, the dividend yield is the entire return on the stock. It is also called the price-dividend ratio.

dividend yield

The annual dividends from a common or preferred stock divided by that stock's market price per share. If ExxonMobil common stock trades at a price of $50 per share, its $.92 dividend provides a dividend yield of $.92/$50 , or 1.84%. This figure measures the current return on a particular common stock but does not take into account potential gains and losses in the security's value.
Case Study While dividend yield can be an important measure of the current income you are likely to receive from ownership of a particular common stock, it can also signal other possibilities, some of which aren't so good. For example, a very high dividend yield is almost certainly a sign that the dividend being paid is likely to be reduced or even eliminated. In the summer of 1996, Northeast Utilities was facing rising expenses as a result of shutting a nuclear power plant located in Connecticut. The firm's stock price, reflecting investor concern about the escalating costs, had declined 50% since the beginning of the year. The reduced stock price of $12 7/8 produced a dividend yield of 13.7% based on the utility's quarterly dividend of 44¢ per share. The high dividend yield stemmed from investors' expectations that the dividend would have to be reduced, perhaps substantially, because of lower earnings and cash flow related to the troubled nuclear plant. A common stock that has a dividend yield higher than the yield on long-term bonds indicates a need for caution.

Dividend yield.

If you own dividend-paying stocks, you figure the current dividend yield on your investment by dividing the dividend being paid on each share by the share's current market price.

For example, if a stock whose market price is $35 pays a dividend of 75 cents per share, the dividend yield is 2.14% ($0.75 ÷ $35 = .0214, or 2.14%).

Yields for all dividend-paying stocks are reported regularly in newspaper stock tables and on financial websites.

Dividend yield increases as the price per share drops and drops as the share price increases. But it does not tell you what you're earning based on your original investment or the income you can expect to earn in the future. However, some investors seeking current income or following a particular investment strategy look for high-yielding stocks.

dividend yield

the DIVIDEND paid by a JOINT-STOCK COMPANY for a given ACCOUNTING PERIOD expressed as a percentage of the current market price per share. For example, if Company X declared a dividend of £1 per ORDINARY SHARE for the 12 month accounting period ending 31 December, and the current market price of one ordinary share in Company X was £5, the dividend yield would be:

dividend yield

the DIVIDEND paid by a JOINT-STOCK COMPANY for a given accounting period (usually one year) as a proportion of the current market price of its share. For example, if Company X declared a dividend of 50p per ORDINARY SHARE for the twelve-month accounting period ended 31 December, and the current market price of one ordinary share in Company X was £10 the divided yield would be:

References in periodicals archive ?
The model also implies a negative sensitivity of price-dividend ratios to expected excess returns, and the magnitude of the sensitivity is substantially larger for more persistent exposure.
These numbers correspond well with the predictions of tables 4 and C1 (with [alpha] = 4): PE ratios (or half price-dividend ratios in the tables) vary between 7 and 8 in the bad state [s.
Table 4 also shows the price-dividend ratio for each state, which we have divided by 2 to make it comparable with the more familiar PE ratio, commonly used for evaluating the level of prices on the stock market.
t+1] when the price-dividend ratio is expected to be high, and more on the dividend [D.
These results are consistent with those of Poterba (2001, table 9), who finds a significant relationship between the price-dividend ratio and demographic variables.
The appendix shows that, under these assumptions, the heuristic-based equilibrium stock price differs from the full-information equilibrium price because it stops being a fixed multiple of dividends; on the contrary, the heuristic-based equilibrium price-dividend ratio now contains a time-varying component, fitting the empirical finding that price-dividend ratios are subject to long swings.
t] is time-varying, fitting the empirical observations that price-dividend ratios are subject to long swings.
Alternatively, investors might use past levels of the price-dividend ratio to forecast future dividend growth because this ratio has been found to successfully predict stock prices in the empirical literature.
16) The heuristics-based approach illustrates how the excess stock volatility puzzle can be easily resolved when the price-dividend ratio is time-varying as a result of limited memory and of availability, representativeness, and anchoring biases.
Such an event is likely to increase the subjective expectation of dividends and the price-dividend ratio.
FI] denotes the constant pricing kernel or, equivalently, the price-dividend ratio.
Expected returns and excess returns are predictable by price-dividend ratios in the time series and in the cross section, roughly matching value effects and return forecasting regressions.