Tag Archives: Dividend

Dividend payout ratio (DPR)

Not so many investors talks about this metrics and DPR is considered to be a tedious measurement. It looks like an important measurement, but nobody know why. DPR measures what a company pays out to investors and money makers in the form of dividends.

You can calculate like this:

DPR = Dividends Per Share / EPS

Let`s say Company A have paid out $2 per share in annual dividends and they had $3 in EPS, the DPR is 66%. ($2/$3=66%). Younger companies have lower payouts or no dividends at all, than the older one.

The companies that is older do business in mature industries that is still growing and therefore can pay out higher dividends which is the best use of their profits. But again, you cannot look on this measurement isolated, but in relationship to other tools and in context of the company`s industry.


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Dividend Yield

Some investors are looking for technology stocks with high growth. You can look for them in stock screens and search for dividend paying characteristics. If you are looking for dividend income and act like a value investor, then you can look for Dividend Yield.

This Dividend Yield number tells you what percentage return for example Coca Cola pays out to shareholders. Older companies like Coca Cola will normally pay out higher percentage than younger companies like for example Twitter.

You calculate like this:

Dividend Yield = annual dividend per share / stock’s price per share

Let`s say a stock trades at $100, and the dividend Yield is 3%. Annual dividend is $3.

($3/$100 = 0,03).

To be in the market and invest money in different markets is like a college class that never ends. As an investor you need to monitor existing stocks and always be on the look for new and great opportunities.

Now it is a good time to check your stock portfolio before the year ends. I will write about that later. News today: ADP non-farm employment change, and trade balance at 8:15am, ISM Non-Manufactoring PMI, and New home sales at 10.00am, Crude Oil inventories at 10.30am.


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