| The dividend yield is dividend per share divided by | | | | you must check the other fundamental |
| the price per share. The dividend yield (DY) is also | | | | parameters. |
| called the dividend-price ratio. The dividend per | | | | The DY of the Dow Jones Industrial Average has |
| share is the dividend for the previous year, while | | | | fluctuated between 3% and 6.0%. The highest |
| the price per share is the current price on the | | | | Dow Jones DY was about 15% (1932), and the |
| stock market. Instead of dividend per share for | | | | lowest DY of the DJIA was below 1.5% (2000). |
| the previous year, estimated dividend per share | | | | At the moment (April 2010) the dividend yield of |
| for the next year might be used. Usefulness of | | | | the DJIA is about 2.7%. It is also important to |
| an estimated dividend yield is in correlation with | | | | notice that a profit can be either reinvested in the |
| the quality of an estimation. It is usually better to | | | | business (called retained earnings), or it can be |
| use official data (stated in various reports) instead | | | | paid to the shareholders as a dividend. Therefore |
| of estimation. | | | | the dividend yield might be zero. Well established |
| A high DY means that a stock is under priced or | | | | companies usually have higher DYs. Growth |
| that the company is facing problems. Similarly, a | | | | oriented companies usually have lower DYs. It is |
| low DY might be a sign that a stock is over | | | | useful to compare DY to the average DY in the |
| priced. To determine the health of a company | | | | industry. |