What is Dividend Yield Ratio?
The dividend yield ratio is a financial ratio of the amount a company pays out in dividends divided by the current share price of the stock. Dividend yield is a way to compare unrelated income-producing stocks to determine their relative value. History Some stocks produce income, or a dividend, while others focus on growth and do not pay a dividend. In examining those stocks that pay a dividend, it is important to convert the dividend per share to a more useful measure. Dividend yield is a way to measure the cash flow that a stock provides. It is also a way to compare dividends from various companies with varying underlying stock prices.The greater the ratio, the greater the cash flow produced. Significance Income-producing stocks typically have less price appreciation over time than growth stocks. However, growth stocks produce no reliable income. Therefore, examining stock performance alone gives an incomplete picture of the company’s stock and its real value. When examining income-p
