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Dividend yield measures the actual cash return you receive from a company.
When you put RM10,000 in the bank, how much money do you get each year?
For 3% per annum, you will receive RM300. Similarly, for the same amount,
you can invest in 10,000 shares of M at RM1 each. If M gives RM0.03 per share
of dividend, how much will you get? Based on RM1 Par value, you will
receive RM300 as well. Here’s the formula:
Dividend Yield = Dividend per share X 100%
Market share price
Investors usually compare dividend yields to bank rates. Rather than putting
their money in the bank to earn 3% per year, some investors prefer to invest
in companies that give good dividends such as Berjaya Sports Toto,
Carlsberg, and British American Tobacco (BAT). Investors can enjoy the
benefits from dividends as well as capital gains.
Companies declare dividends in two ways: cents per share and percentage
per share. For example, 3 cents per share or 3% per share.
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