Dividends4Life: Calculating Your Returns From Dividend Stocks

Calculating Your Returns From Dividend Stocks

Posted by D4L | Thursday, January 20, 2011 | | 0 comments »

Dividend yield -- also called “current yield” is the percentage of a stock price you earn from dividends. These are usually paid quarterly, so each quarter’s yield will be one-fourth of the current annual yield. To confuse the matter a little bit, corporations declare dividends not as a percentage but as so much per share. This still does not tell you the dividend yield. To find this, divide the dollar value of the annual dividend by the current share price.

The dividend yield should be a key ingredient in your evaluation of your portfolio and in the selection of companies whose stock you are thinking of buying. Some companies pay exceptionally high dividends and yet are considered very safe investments. This is not always the case, so if you just pursue the highest possible yield, it makes sense to perform a few fundamental tests first, and to determine whether or not it is safe to buy shares.

Source: Minyanville

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