When looking for a dividend stock the main thing to look for is the
dividend per share and dividend yield but this is only a small part, we
also have to look at the company’s payout ratio and their dividend
policy.
These are also crucial which is not shown in the KLSE screener so we
will take you through the steps of dissecting it and also how to
calculate and look through these values when doing your homework.
dividend per share and dividend yield but this is only a small part, we
also have to look at the company’s payout ratio and their dividend
policy.
These are also crucial which is not shown in the KLSE screener so we
will take you through the steps of dissecting it and also how to
calculate and look through these values when doing your homework.
What Is Dividend Per Share?Dividend per share also known as DPS which you will usually see in
your KLSE screener app, it is the sum of declared dividends issued by a
company for every ordinary share outstanding. DPS that is growing
over time can be a sign that a company's management believes that
their earnings growth can be sustained thus rewarding shareholders
with more dividend. But it is not always the case as we have to also
look at the company’s payout ratio and EPS (we will cover EPS in the
next “Short & Informational series”). DPS is counted as per below:
= DPS = Annual dividends / purchase price (share price) =
What is Dividend Yield?The dividend yield is the ratio of a company's annual dividend
compared to its share price. The dividend yield is represented as a
percentage. Calculation as below.
= Dividend Yield = DPS / share price * 100% =
Annual dividend is the total DPS for 1 year which is divided by the
current share price.
E.g: Company A annual dividend is 40 cents and its share price is RM4
so in total the DY for the year is 10%.
Annual dividend is the total DPS for 1 year which is divided by the
current share price.
E.g: Company A annual dividend is 40 cents and its share price is RM4
so in total the DY for the year is 10%.
What is Payout ratioDividend payout ratio shows the percentage of earnings paid out as
dividends to shareholders, typically known as a percentage of the
company's earnings.
The payout ratio can also be said as dividends paid out as a proportion
of their cash flow. Easiest way to calculate dividend payout ratio is to
take the total dividend and divide it with their EPS which you can get
that value in the KLSE screener or you can also divide with net income
which we usually get those values from Morningstar or company’s
annual report.
Most of the time if you see a company’s dividend payout ratio rise to
above 100% means you know they are giving out more cash than they
are receiving, the ideal one would be their DPR while their DY/DPS
, with this you will know that their EPS and their net income has
increased and even when they are giving out more dividend they are
still giving out lesser DPR which they can use their access cash for their
capital expenditure or towards paying off their debts and liabilities.
= DPR (Dividend Payout Ratio) = Total dividends / EPS or Net Income =
What is Dividend policy?Dividend policy is the policy a company uses to structure its dividend
payout to shareholders basically its like a promise that the company
will at least give that amount of dividend per year. This is another way
to make shareholders to trust the company and to put more money
into the company. Note that their dividend policy can change yearly so
we have to keep doing our homework from time to time.
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Disclaimer:
All the views and opinions expressed in our post are for education and informational purposes only and it should not be considered as professional financial investment advice or buy/sell recommendations. We strongly encourage you to do your own research and take independent financial advice from a professional before you proceed to invest.
We make no representations as to the accuracy, completeness, correctness, suitability, or validity of any information on our Facebook Page/Group and will not be liable for any errors, omissions, or delay in this information or any losses and damages arising from its display or usage. All users should read the posts and analyze the information at their own risk and we shall not be held liable for any losses and damages.
https://klse.i3investor.com/blogs/12stocktalkeng/221162.jsp
All the views and opinions expressed in our post are for education and informational purposes only and it should not be considered as professional financial investment advice or buy/sell recommendations. We strongly encourage you to do your own research and take independent financial advice from a professional before you proceed to invest.
We make no representations as to the accuracy, completeness, correctness, suitability, or validity of any information on our Facebook Page/Group and will not be liable for any errors, omissions, or delay in this information or any losses and damages arising from its display or usage. All users should read the posts and analyze the information at their own risk and we shall not be held liable for any losses and damages.
https://klse.i3investor.com/blogs/12stocktalkeng/221162.jsp
