WHAT IS THE DIFFERENCE BETWEEN THE DIVIDEND YIELD AND DIVIDENDPAYOUT - ProProfs Discuss
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What is the difference between the dividend yield and dividendpayout ratio?



Asked by Grayson, Last updated: Nov 07, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Dividend yield = (dividend per share / market price per share) x 100dividend payout ratio = (dividend per share / earnings per share) x 100dividend yield indicates how much of an income return you receive for the money youspend on your investment. for those seeking income, higher dividend yields would bemore attractive, provided the company is financially stable.dividend payout ratio indicates how much of the companys profits are being paid outto shareholders. a really high number indicates a substantial portion of earnings havebeen paid out. the most likely cause for very high number is that earnings areextremely low but the company decided to maintain a regular dividend payment.further investigation of the companys financial health would be required.
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