Hi There,In general…“Dividends” are your share of the net profits made by the company, which the Board of Directors has decided to share with you. That's because as a shareholder, you are an owner of the company.Regular dividends are paid on a quarterly basis—that is, every 3 months. Sometimes they make special one-time payments, but quarterly is the standard.For Example: If a company has 100 investors in its business & has made a profit of Rs. 1 lakh. Then it would give Rs.1000 to each of its investors.I have answered similar questions before. Have a look:Khushi Gupta's answer to Khushi, how do you identify dividend stocks?Khushi Gupta's answer to How will I receive the dividends from my stock?Khushi Gupta's answer to How do I know the dividend received by me in my demat account?Hope this answer helped!..
For me it's DPS / EPS So in most cases, your calculation is correct.Though if there are 2 classes of shares, with different rights. You should revert to Dividend per Share divided by Earnings per Share.Also you need to think about what EPS. I'd recommend you calculate both Fully Diluted EPS and Fully Diluted Adjusted EPS. Though some folks would say only Basic EPS counts.Confused?If so, remember it's not a science. The more important consideration isDo they pay dividendsAre they growingAre they sustainable
Dividend doesn’t have anything to do with the book value. It is the percentage of the face value. If the face value is Rs 10, and if the dividend is 20%, you’ll get Rs 2 per share, irrespective of what the book value or the market price is !
If a stocks dividend is expected to grow at a constant rate of 5 % per year.?
A) the expected return on stock is 5% per year. i think... "C" is almost irrelevant; companies don't base dividends like that anymore. "B" works only in a specific case: if the grow rate is at 5% a year, the dividend can still be any other number "A" works because (if you are talking about percentage points), it would work in literal terms; the dividend growing at 5 percentage points a year would give a 5% ROI. If you were talking about regular percents, for instance, 5% of a 4 percentage points dividend, a 0.2 percentage points total gain... this one is a bit confusing, i'll admit.
Information is insufficient.How much is your earning per share? How profitable is investment of retained earning(after paying shareholders the dividend)?Case-1. In this case, you have assumed that board invested all the retained earning in maintaining the constant profit or revenue(keeping macroeconomics conditions unchanged) because this is the only explanation of how did company's market cap(total share x market value /share) is constant. Case-2. It is a good company because you got all your initial investment back in 10 years which means it has a P/E ratio of 10 when you bought the company(which is a great valuation) assuming you give all your profit as dividend.There can be many number of such cases but let me simplify it, If you ever finds a company which give you a constant dividend(in your case it is too high) every year then immediately buy such companies. But you never know when company starts losing its market share which will reduce its market value of a share and your investment will decrease.
No.A stock with 20% yield can only be sustainable if it's totally missed by institutional investors, and is thus severely undervalued/undercovered. If it has any bit of coverage, you should not expect it to be sustainable if you only have public information.Why should it? Investors would jump into it (bumping up the price) until it ceases to be "undervalued" (or close). Investors' expected return depends on the risk level. Therefore, for something that the market permits to yield at 20%, it must be very risky (i.e. uncertain cash flows). In the world of the Capital Asset Pricing Model, that means it must have a really high Beta.So the company could one year be making $200 million, then losing $500 million the next--who knows. This usually comes from high leverage, like in REITs like NLY (as many here have mentioned).If you're curious, take a look at the financial statements of NLY: http://www.google.com/finance?q=... (specifically their cash flows). You'll see that their free cash flow is negative (i.e. cash left over at each period after investments), and issuing a ton of debt. In the six months to 6-30-2011, it issued 3 billion dollars in stock and 12 billion dollars in debt, compared to 900 million dollars in dividends.So I guess 20% yield is sustainable if the company sells enough shares to make up for it, but in terms of investment, no, it isn't sustainable--because their share sales will dilute the dividend payments per share.
Depending on your broker, you can always just run a simple stock screener through your broker's website. I don't know which broker you use, but the one I use (Ameritrade) has a few dividend-oriented criteria that can be used. Since you're looking for "payout rates" (you should really consider a Dividend Yield screen) for major companies, I recommend using the following criteria, as a minimum:Dividend Yield = 2%-5%Market Capitalization = Large CapMind you, the above criteria currently give me a result of 410 companies. That's a lot of companies to look at. You might consider adding a popular index like the S&P 500 as an additional criteria (still leaves me with 228 companies) and maybe even a specific sector. Adding in the sector and/or industry of interest should really narrow down your search.A word about dividend yields: it's usually not a great idea to pick a stock with a high or low yield. While there are some situations in which a good company experiences a brief "correction" in share price resulting in a high yield, quite often a company will have a high yield because their share price dropped for a very valid reason. In such cases, there's a risk that the company will announce a decrease in its dividend payment, which will then decrease their yield. Likewise, a company with a low dividend yield may have such a low yield because their share price has run up to a level that exceeds the company's target yield. This can, but won't necessarily, be a concern as there is a possibility the share price has climbed enough to encourage growth-oriented investors to take profits by selling shares. But there is a silver lining in low-yield stocks too. If the share price has climbed to a point where the yield falls to a low level, and it turns out the company is still fairly valued, there's always a possibility that they will increase their dividend too.
Which of the following statements is most correct with respect to stock dividends?
Which of the following statements is most correct with respect to stock dividends? 1. The payment of a stock dividend reduces the number of common stock shares outstanding. 2. The payment of a stock dividend generates an increase in the retained earnings account. 3. The total value of the shareholders' equity account is not altered by the payment of a stock dividend. 4. Stock dividends are typically represented by an increase of 100 percent or more in previously outstanding stock.
The formula for a dividend payout ratio is....Dividend payout ratio =Dividends/Net Income or, Dividend payout ratio= (Dividends per Share)/(Earnings per Share)Here's a video I made if you want some more information around why it's important.