What is the dividend ratio?

The dividend ratio with a yield communicates the value of the return that investors receive. To calculate this figure, the dividend rate is divided by the current price of the company's shares. This number is often an essential tool for investors who rely on dividend income, but investors can also be used. It is important that less experienced investors realize that this ratio may not remain constant due to market volatility.

The dividend concerns part of the company's profits that are paid to shareholders. This payment is made at the share rate. Some individuals may want to determine how much money they will return in comparison with what they have inserted. In order to determine the value of their investment in this way, they can calculate the dividend ratio.

To make this calculation, a person needs two information. It needs a dividend rate of the company and its current stock price. The dividend rate is located as a numerator, the stock price is used as a denominator, and then the numbers are divided. The result is pan oměr that is expressed as a percentage.

For example, if the share of YYY CORP is $ 100 (USD) and dividend is $ 1, the dividend yield ratio is 1 percent. The greater the difference between the price of the shares and the degree of dividends, the lower the ratio. Because most of the stock prices are volatile, the dividend yield may fluctuate.

Unlike some other investment tools, there is usually no professional advice on this ratio. Instead of existing a general standard, this number is subject to personal standards. The dividend investor may have a set level and may decide not to buy any shares unless the dividend yield ratio is at least 5 percent. In this case, YYY shares would not meet its needs, but for another investor may be a suitable ratio of 1 percent.

Some investors may use tpometer ratios Ritting comparison between stocks and favors those who have the topmore than one. Dividend investors are not the only individuals who tend to calculate this ratio. For example, investors of stock values ​​can use it to determine whether there is a sufficient return on their investment. This ratio will generally not be used to assess growth reserves. Despite the true motive of using the dividend ratio, the most experienced investors will not only set up their decisions on it.