What is a Dividend Yield?
Let’s learn 👇🏽
Let’s learn 👇🏽
1/
How to work it out
DY = annual dividend / price per share.
For example:
Company A’s share price = R50
Annual dividend = R6.50
Dividend yield =
R6.50 ÷ R50 = 0.13 x100
DY= 13%
How to work it out
DY = annual dividend / price per share.
For example:
Company A’s share price = R50
Annual dividend = R6.50
Dividend yield =
R6.50 ÷ R50 = 0.13 x100
DY= 13%
2/
Why is this important?
You can workout how long it will take you to get your initial investment paid back to you.
The higher the dividend yield, the quicker it takes.
Let’s assume no reinvesting, which if the price is lower - you should.
Example: 👇🏽
Why is this important?
You can workout how long it will take you to get your initial investment paid back to you.
The higher the dividend yield, the quicker it takes.
Let’s assume no reinvesting, which if the price is lower - you should.
Example: 👇🏽
3/
I invest R100k in Company (A) with a DY of 13%
It means I’d be paid R13k each year in dividends💰
R100k ÷ R13k = 7.6
It would take 7.6 years before all my money is returned back to me.
(Doesn’t include stock appreciation)
So, Regardless of what the stock price does…👇🏽
I invest R100k in Company (A) with a DY of 13%
It means I’d be paid R13k each year in dividends💰
R100k ÷ R13k = 7.6
It would take 7.6 years before all my money is returned back to me.
(Doesn’t include stock appreciation)
So, Regardless of what the stock price does…👇🏽
Even if the stock went down by 50%. (NOW R25) i’d still be up.
There’s a loss of 50% on a computer screen, but I have been paid out R100k in dividends
My return would still be 50% over 7.6 years.
50 ÷ 7.6 years = 6.5% return annually for just over 7 years.
There’s a loss of 50% on a computer screen, but I have been paid out R100k in dividends
My return would still be 50% over 7.6 years.
50 ÷ 7.6 years = 6.5% return annually for just over 7 years.
Example:
Time = 7.6years
R100k initial investment which now reflects a R50k loss (don’t sell because it’s just numbers on a screen and unrealized)
R100k in dividends
Total R150k
50% gain.
Time = 7.6years
R100k initial investment which now reflects a R50k loss (don’t sell because it’s just numbers on a screen and unrealized)
R100k in dividends
Total R150k
50% gain.
4/
Falling share price.
If the price of company (A) continues to fall, the dividend yield rises.
The equity (stock price) becomes cheap relative to their cashflow.
Because it would take less time for you to get out your initial investment.
It’s how I invest (cashflow)
Falling share price.
If the price of company (A) continues to fall, the dividend yield rises.
The equity (stock price) becomes cheap relative to their cashflow.
Because it would take less time for you to get out your initial investment.
It’s how I invest (cashflow)
5/ let’s tie this back in to my favorite share.
Sibanye Stillwater $SSW
Current price = R50.44
Dividend yield is 12.15%
As the price falls the yield goes up.
They are highly cash generative, and, IMO, won’t stop paying dividends anytime soon.
Sibanye Stillwater $SSW
Current price = R50.44
Dividend yield is 12.15%
As the price falls the yield goes up.
They are highly cash generative, and, IMO, won’t stop paying dividends anytime soon.
This is why I cheer and continue to hope for the share price to sell off heavily.
Because as the price drops I see $$$$$
Because as the price drops I see $$$$$
6/
That’s the tweet, a quick lesson on Dividend yields.
If you like my content, don’t forget to follow @talkcentss and to retweet this tweet😊
Side note:
Above calculations haven’t included 20% tax on dividends. So you’d work that into it too.
I just simplified this.
That’s the tweet, a quick lesson on Dividend yields.
If you like my content, don’t forget to follow @talkcentss and to retweet this tweet😊
Side note:
Above calculations haven’t included 20% tax on dividends. So you’d work that into it too.
I just simplified this.
Please retweet the first tweet. 👇🏽
You’d make my Wednesday. 😊
You’d make my Wednesday. 😊
https://twitter.com/talkcentss/status/1465894180190707715
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