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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