Sunday, December 26, 2010

Dividend Yield

The dividend yield is a measure of the amount of dividends received from an equity investment. The dividend received is expressed as a percentage yield, thereby making it comparable to other income investments. The dividend yield is calculated by dividing the dividend per share by the price per share. Some investors will overweight higher yielding stocks in order to generate a stream of dividend income. Dividend yield can also be used in market analysis; if you obtain the market dividend yield and track it across time it will serve as a useful valuation metric - if the dividend yield decreases it means stocks are relatively more expensive, but if the dividend yield rises it means that stocks are relatively less expensive.

Synonyms: Yield, Return on investment, Dividend income, Dividend

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