For Japanese investors, this kind of actual or, more correctly, prospective yield from stock ownership may be acceptable.
Equity returns before valuation adjustments are a function of earnings growth (which have their root in GDP growth) and dividend yield including stock buybacks.
So study charts of earnings yield (earnings per share divided by stock price) versus dividend yield (dividends divided by stock price).
In combination with a 2% dividend yield, this stock offers a substantial 9% earnings yield that compares well with current bond returns.
You add the dividend yield to your stock price increase to produce a total return that incorporates both the stocks yield and its capital appreciation.
Another reason to like dividend stocks is they tend to be less volatile over time because yield provides support: a stock yielding 5% is less likely to get cut in half and yield 10% than a non-dividend paying growth stock or a low-yielding stock.
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Exelon has a 4.4% yield and its stock price has dropped 14.9% over the past year.
If EPS estimates are cut and the bond yield rises, stock valuations will become less attractive.
The company also boosted its quarterly dividend to 5.75 cents from 4.25 cents, boosting the yield on the stock to 3.6%.
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Bank of America offered a 0.72% yield while its stock plunged 58%.
In the case of Lockheed, lean valuations and a fat 5.2% yield make the stock look attractive, even with an uncertain future.
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From a growth perspective, stocks and bonds are valued properly in relation to one another when the stock yield is sufficiently higher than the bond yield to compensate you for the risk of future earnings shortfalls.
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And an earnings yield a nice way of comparing a stock to a bond yield of more than 10%.
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Goldman Sachs had to accept a 10% yield on the preferred stock bought by Warren Buffett.
And the payout provides a nice yield at the current stock price.
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That is simply not a high enough dividend yield to make this stock worthwhile given the better alternatives out there.
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Throw in a better than 3% yield and you have a stock that looks irresistible by our standards.
But the stock even after the recent slide in price the stock has a yield of just 2.4%.
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Perhaps Best Buy would be better off using the money it spends on training to reward shareholders by increasing its paltry 0.6% dividend yield or by buying back stock.
That gives the stock an annualized yield of 2.5%.
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You know, right now, we do have a little bit more concentration in the preferred stock and high-yield growth.
Another small stock with a big yield is Navios Maritime Partners, a company that owns and operates drybulk carriers.
Gougeon and Amplatz are back on the board, awaiting a public stock offering that should yield a healthy profit for Welsh Carson.
But nowadays, getting a 4% yield while you wait for a stock to recover is a pretty enviable position to be in.
Unfortunately, however, as a stock's price rises, its dividend yield falls (assuming the payout doesn't go up as much as the stock's gain).
At the current yield, the Series B preferred stock yields half as much as the common stock but again, with a lot less volatility.
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With a solid growth trajectory, rising earnings estimates, healthy dividend yield and reasonable valuation, the stock has plenty to interest investors seeking growth and income.
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