The dividend yield is an important valuation indicator in investing in stocks. What does the dividend yield mean? What is the formula for dividend yield? Here is a brief explanation for you, and I hope it will help you.
Dividend yield is also a commonly used valuation indicator, called DP for short. Dividends refer to dividends, and dividend yield is a measure of the earnings from cash dividends of an enterprise in the past year from the perspective of dividends. It measures the relationship between the market value of an enterprise and its cash dividends. Calculation formula of dividend yield:
股息率=公司分红/公司市值
DP=D/P
The dividend yield is calculated differently from the P/E ratio and P/B ratio. The dividend yield takes the company's market value as the denominator. This is because the dividend yield is similar to the yield in financial management, so this calculation method is followed.
The dividends of the company mainly come from the profits of the enterprise. The enterprise will operate its own business every year, and a part of the profits earned every year will be distributed to shareholders in the form of cash dividends. Generally, listed companies pay dividends once or twice a year, and we use the last dividend data.
But we need to know that not all of the annual profits of the enterprise are used for dividends. Some of them need to be put into production, and the other part is distributed to shareholders in cash. But what is the dividend ratio? The dividend ratio is the proportion of the enterprise's dividends in the profits:
分红比例=公司分红/公司盈利
At present, the dividend ratio in China is relatively low, generally 30-40%, and the mature market can reach 40-60%.
For an index, the dividend yield formula is similar to that of a stock:
指数的股息率=指数的所有成分股分红之和/指数的所有成分股的市值之和
Generally speaking, for the same variety, the higher the dividend yield, the higher the investment value.
