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Dividend Yield Strategy

Dividends are describing payouts to the shareholders of one company. Value oriented investors expect a continuous payment of dividends. At the same time they are also expecting periodic dividend increases.

[Translate to English:] Kurs-Umsatz-Verhältnis

Finanzoo Weighting

Finanzoo.de considers the number of dividend payments within a certain number of years and the increase of dividend payments as equally important and therefore weighs them with the same factor in the quotation of its FScore. 10% of the final FScore value are being made up by the analysis of the dividend. Therefore the dividend is the second biggest single contributor next to the free-cashflow-ratio.

[Translate to English:] Kurs-Gewinn-Verhältnis

Dividend Calculation

The dividend yield can be calculated by dividing the last known yearly dividend by the actual share market price and the multiplying the result by 100%. The resulting figure is the interest in percentage of the invested capital per share. 

Example: Dividend: 5,00 $
Stock market share price: 100,00 $
Dividend Yield: (5,00 $ / 100,00 $)* 100% = 5,00%

Finanzoo.de calculates the dividend yield based on the last know day-end price and based on the last published yearly dividend. Additionally all dividend yields of all analyzed companies can be looked up in one table and can then be compared amongst each other.

[Translate to English:] FScore Bewertung

Discussion Dividend Yield - Take Taxes Into Consideration!

Dividend payments are tax relevant in almost all cases and countries. Depending on the single country the tax rate for dividend payments may be different. In most cases the tax amount will be already deducted from the dividend payment by the depositary band and transferred to the tax authorities. In some countries investors my claim these taxes back. Please have a close look at the respective rules for each country.

[Translate to English:] value investing

Dividend Amount

Most investors are primarily interested into high dividend payments as these represent the interest on their capital invested. Investors should additionally also look at continuous dividend payments in as many as possible consecutive periods. This can be a sign for a healthy and steadily growing company. Furthermore many investors expect a steady growth of dividend payments. This is considered an inflationary adjustment. But also a steady dividend growth is considered as a sign for one company's ability to increase its gains sustainably.

[Translate to English:] Dividendenrendite

Dividend Aristocrats

Companies that are able to pay and grow dividends without any interruptions are being considered as dividend aristocrats or dividend stars. Investors honor their capability and reliability. Mainly the economic power to be able to pay dividends also in times of severe crisis is being appreciated by value oriented investors.

[Translate to English:] Gesamtkapitalrendite

Payout Quota

Very often investors are analyzing the ratio of the profit that is being distributed as a dividend. Alternatively to making payments to the investors profits may also be used for investments or to pay off debts. These thoughts show that value oriented investors who are looking at the longterm chances of a company will always have to consider other economic data of one company and can not only rely on the analysis of the dividend payments. For example very high payout quotas can harm one company's longterm growth as it might make necessary investments impossible. On the other side it might be reasonable for one company to reduce its payout quotas in order to reduce its depths so that longterm their financing costs will be reduced. Short term oriented investors will not look at these last factors as they are only interested in a high payout quota and a consequently high dividend payment in order to increase the interest on their capital invested.

[Translate to English:] dividende

Sector Comparison

Apart from exclusively analyzing the dividend yield and dividend history of single companies more and more investors nowadays look at the dividend payments of whole sectors as well. Value oriented investors are trying to adjust the proportion of sectors within their portfolio based on a detailed dividend analysis.