What’s
Dividend Yield?
Dividend yield is your rate of return from the dividend payouts,
exclusive of any stock price appreciation. It’s calculated by dividing
the dividends you receive over a year’s time by the price you paid for
the stock. For example, your dividend yield is 5% if you paid $20 per
share, and you receive $1 per share in dividends ($1/$20) over the 12
months following your purchase.
Dividend yield is not a fixed
number. For instance, say someone else buys the same stock a week later
when the share price had moved up to $25. Instead of 5%, their dividend
yield would only be 4% ($1/$25).
The annual dividends used to
calculate the estimated dividend yields listed on the Big Dividend Stock
List are simply the company’s last quarterly dividend multiplied by
four. The estimates will be wrong if the company drops its dividend in
future quarters.
Building the Big
List
To
qualify for the Big List, a stock must have a minimum 2.4% estimated
dividend yield. When I last checked, more than 1,900 stocks met that
requirement, too many to list here. So I cut the list down by adding
checks to weed out the companies with faltering earnings growth, and
thus most likely to cut future dividends.
I’ve also ruled out stocks
with above 20% estimated dividend yields. You don’t get yields that
high on stocks. So those estimated yields are either based on faulty
data, or the company is expected to significantly reduce its dividends.
Patience Required
The Big
List covers four
pages, each listing about 200 stocks. Even so, be patient, there’s a
lot of data on each page, so they pages may take some time to load.
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