What is the difference between yields and dividends?


Dividends the amount of dividends is the total return the investor receives shares or other dividend yield of the asset over the financial year. However, stock dividends instead of the often Quoted, using another figure: dividend yield. The yield is calculated from the total annual dividend and dividing that figure by the current share price.

Dividend rates are expressed as an actual dollar amount, for example, company Y paid the annual dividend rate of $5. When this amount is the dollar is quoted in terms of a dollar cost per share, it may also be referred to as the dividend per share or DPS. You can see the history of payments of dividends in terms of relations with investors of most sites.

There are other types of dividends. Some companies pay dividends in the form of additional shares or even property. Companies can do this when they decide what they want to pay dividends, but you need some extra cash for liquidity or expansion.

Dividend yield is defined as the percentage, not the dollar amount. You are more likely to see dividend yield quoted than the dividend amount. The initial reason this makes sense; a company that pays dividends at a higher percentage of its shares offers a great return for shareholders investment. It is better to receive $3 in dividends on the shares of$ 50 than $5 in the form of dividends on shares of $100, because the investor can supposedly just to buy two $50 shares and receive $6 in dividends in this way. The dividend yield tells you the most efficient way to earn a return.

Unfortunately, based on the dividend yield presents some problems. Dividend yields may differ significantly, therefore the estimated rate of return may in fact have little to do with the fact that the future rate of return (ROR) will be. In addition, the dividend yield is inversely proportional to the value of the shares; the increase in yield can be bad if it only happens because the company’s stock price falls.

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