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Dividend yield definition | Financial ratios
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Dividend yield definition

Description

Dividend yield shows the amount of money that is earned from the investment into a company’s share, a market price of which is taken for the ex-dividend day. To provide an easier explanation, dividend yield can be described as a ratio that shows how much dividends the company pays out per one dollar of share (in market value). Data to calculate this ratio is collected from stock market bulletin.

This ratio is important for the investors, because it helps them to decide whether to buy new shares or sell those that they own.

Norms and limitations

In general there are no norms for this ratio.

For the companies that do not pay dividend this ratio equals a zero.

Formula

Dividend per share is the amount of money for one outstanding share.

Share price shows the current market price of the share.