Dividend Yield Strategies for Income-Focused Equity Portfolios
Dividend Yield Strategies for Income-Focused Equity Portfolios Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. In simpler terms, it tells you what percentage of your investment you get back in dividends annually. Here's the formula: Dividend Yield = (Annual Dividends per Share) / (Price per Share) Let's break it down with an example: Imagine a company called "Example Co." They pay an annual dividend of $2 per share. Their current share price is $50. To calculate the dividend yield: Dividend Yield = ($2 / $50) = 0.04 or 4% This means that for every $100 you invest in Example Co.'s stock, you can expect to receive $4 back in dividends each year. Key things to remember about dividend yield: It's expressed as a percentage. This makes it easy to compare different stocks. It fluctuates with the stock price. If the stock price goes down, the dividend yield goes up (assuming...