Glossary

Dividend

A dividend is a share of profits and retained earnings a company usually pays out annually to its shareholders – after it’s used a portion to reinvest in the business.

A dividend is often regarded as a measurement of a company’s health and good management. Mostly profitable or cash rich firms pay out dividends and some investors rely on these annual returns for investment income.

Dividend yield meaning

The dividend yield is a financial ratio that represents the cost of dividends each year relative to the company’s stock price. It usually gets expressed as a percentage and it’s calculated by dividing the dividend per share by the price per share.

A company's total annual dividend payments are divided by its market capitalisation if the number of shares remains constant.

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