Dividend is a concept that is no longer strange to anyone who invests in securities. It benefits shareholders, so understanding it will bring a lot of advantages. However, for those who are just starting out, there will be many surprises. The following article will help you learn more about what dividend yield (DPS) is ? What role does it play and what does it mean? Let's find out right in this article!
What is Dividend Yield (DPS)?
Dividend yield (DPS) is a measure of how much profit you can get from dividends. However, this is only the cost of the expected return of buying shares at current prices. To put it more simply, if you have shares in a company, the company will extract a portion of the after-tax profit to pay you back. The amount set aside to pay dividends will be discussed and agreed upon in the general meeting of shareholders.
What is Dividend Yield (DPS)?
The formula for calculating Dividend Ratio is as follows:
Dividend yield = Dividend per share / Market value per share
In there:
- Dividend per share is the dividend that a business pays to its shareholders per share owned.
- Market value per share, also known as market price of a share, is the price of the stock at a particular point in time.
What is the role of dividend yield (DPS)?
The cooperation of many shareholders will create a business. When a business does well, it generates a lot of profit. That means more dividends to be paid to each shareholder. Therefore, dividends serve as the capital goal of shareholders.
Dividend yield plays a huge role for shareholders
Dividend distribution is not simply the redistribution of profits to shareholders. It also has very important implications for shareholders:
- Periodic dividend payment will show shareholders that the company's business is still favorable and profitable.
- Bringing shareholders a stable source of passive income. Contribute to increase each person's personal income fund.
- In addition, dividends can also help investors enjoy compound profits if interest rates fall sharply.
Meaning of yield yield
What is the meaning of dividend yield (DPS)? Dividend yield shows that for each dollar of the market value of that stock, how much dividend will be received back by the Investor.
The higher the dividend yield, the more dividends investors receive. With 1 dong spent to buy that stock. This proves that the company is operating effectively. And investors and owners are the ones who benefit the most.
The higher the dividend yield, the more dividends investors receive
The lower the dividend yield, the less dividends investors will get back when investing in these stocks.
Above is some information to help readers understand what is the dividend yield (DPS)? As well as the role and meaning it brings. If you have any questions regarding dividend yield, please contact us for the fastest response.
