Shareholer yield vs Divident yield
Why ‘Shareholder Yield’ Is Better Than Dividend Yield. Where to Find It.
https://www.barrons.com/articles/why-shareholder-yield-is-better-than-dividend-yield-53cf9f39?siteid=yhoof2
Summary
- Dividend yield is a measure of a company's dividend payments relative to its share price. It is calculated by dividing the annual dividend per share by the current share price.
- Shareholder yield is a broader measure of a company's total return to shareholders, including dividends, share repurchases, and capital appreciation. It is calculated by dividing the total return to shareholders by the current share price.
- The article argues that shareholder yield is a better measure of a company's investment potential than dividend yield. This is because shareholder yield includes the effects of share repurchases and capital appreciation, which can have a significant impact on a company's total return.
- The article also argues that dividend yield can be misleading, as it does not take into account the fact that some companies pay dividends out of retained earnings, which could otherwise be used to invest in the business and grow earnings.
- The article concludes by saying that investors should focus on shareholder yield when evaluating companies for investment.
Here are some additional points from the article:
- Shareholder yield is a more comprehensive measure of a company's total return to shareholders.
- Dividend yield can be misleading, as it does not take into account the fact that some companies pay dividends out of retained earnings.
- Investors should focus on shareholder yield when evaluating companies for investment.
Comment
If the shareholder yield is the total return of the company's profits to shareholders, the divided yield is a direct distribution given in cash on a regular basis.
Obviously, when evaluating the true value of a stock, it seems appropriate to evaluate the shareholder yield, which has the nature of total return, but most stocks are traded at a premium or devaluation, and such an imbalance between value and price can only be resolved over a long period of time.
In that respect, it seems certain that the divided yield is also a method of company evaluation that cannot be ignored.
I think it is right that these valuation methods should be applied differently or flexibly depending on the nature of the stock, industry and time.