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Dividend Yield A number you commonly see thrown around when discussing Dividend Stocks
The formula is:
Annual Dividend
———————- X 100%
Price of Stock
Let’s use $T as an example:
Annual Dividend = $2.08
Current Price of stock = ~$30.16
So we have,
$2.08
———- X 100% = 6.90%
$30.16
Note that Dividend Yield is always fluctuating since the current price of the stock varies throughout the day
Annual Dividend = $2.08
Current Price of stock = ~$30.16
So we have,
$2.08
———- X 100% = 6.90%
$30.16
Note that Dividend Yield is always fluctuating since the current price of the stock varies throughout the day
What does the Dividend Yield tell us
Well, to sum it up, it is a metric that shows us how much bang for our buck we are getting in terms of dividend payments
A stock that yield 2% will give us considerably less dividends than $T
Well, to sum it up, it is a metric that shows us how much bang for our buck we are getting in terms of dividend payments
A stock that yield 2% will give us considerably less dividends than $T
So why shouldn’t I just invest in stocks that have high dividends
In MOST cases (besides REITS), a dividend yield above 5% should be deeply analyzed
A shady company can attract investors with a high dividend yield, fully knowing that they can’t pay it
In MOST cases (besides REITS), a dividend yield above 5% should be deeply analyzed
A shady company can attract investors with a high dividend yield, fully knowing that they can’t pay it
This is called a yield trap 
Don’t chase a high yield
It is important to remember that companies are not legally obligated to pay dividends
They can decrease or discontinue their dividends if they choose to...
Don’t chase a high yield
It is important to remember that companies are not legally obligated to pay dividends
They can decrease or discontinue their dividends if they choose to...
Instead of solely relying on the dividend yield...
I suggest you have a checklist of different criteria like:
Consecutive years of dividend increases
Payout Ratio
P/E Ratio
And many more
Please do your research when investing...don’t just follow the crowd
I suggest you have a checklist of different criteria like:
Consecutive years of dividend increasesPayout RatioP/E RatioAnd many more
Please do your research when investing...don’t just follow the crowd
