The dividend yield is a measurement that shows how much a company pays out in relation to its priceWhat are value stocks? A value company is a company that app... More. It can be calculated with the following formula:
The following example shows why it is important to establish this relationship:
If company A’s annual dividendWhat is a dividend? A dividend is a payment made by a comp... More is $2 and the value of its stock is $20, the dividend yieldThe dividend yield is a measurement that shows how much a co... More is 0.1 or 10%. Company B also pays a $2 dividendWhat are value stocks? A value company is a company that app... More but the value of its stock is $40 — this means Company B’s dividend yield is only 0.05 or 5%.
This shows that, based on the dividends in relation to the share price, company A may be more interesting to than company B, because investorsWhat are value stocks? A value company is a company that app... More will get more for the amount they invest.
