What is a dividend yield?
Where do you see this? In company announcements and newspaper reports. What does it mean? Dividend yield tells you what percentage the stock returns relative to its price. It can be calculated by taking annual dividend per share divided by the stock’s price per share. Thus, if the price drops and if the dividend stays the same, the yield will rise. For investors who like to have a steady cash flow from stock investments, the dividend yield is one basic indicator to identify high dividend corporations. Singapore stocks that come with attractive dividend yields include StarHub and Singapore Post. Why is it important? One might be tempted to buy stocks with high dividend yields for their hefty payouts, but note that buying such stocks is not without its risks. The reality is that when the going gets tough, companies can slash dividends. For example, some major American financial institutions that have cut their payments showed an uncanny pattern of dividend cuts and then massive failures.
