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Dividend Yield Explained

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This video will teach you what dividend yield is, how to calculate it and why it's important. Dividend yield is the dividend, relative to the price of the investment. What are dividends? Check out the previous video: https://www.youtube.com/watch?v=8s_8O99dNC0 Twitter: https://twitter.com/MrSoniBros Facebook: https://www.facebook.com/mrsonibros Didn't hear me properly? This is what I was saying: Today we're going to be learning what dividend yield is. We already know what a dividend is from the previous video, now we just need to know the yield part. If you don't know what a dividend is, just click on the word dividend to watch the previous video, and then come back to this video. Let's use the hypothetical company from the last video, Soni's Shawarma. Soni's Shawarma is a restaurant chain that has thousands of restaurants across the country, and obviously, sells shawarmas. Soni's Shawarma pays a quarterly dividend of $0.25. Which means in a year, it pays a total dividend of a dollar, since 25 cents every 3 months adds up to a dollar every year. So we know how much Soni's Shawarma pays in dividends for every share that we own, but we don't know how much it costs to buy one share of Soni's Shawarma. What if I told you that one share of Soni's Shawarma costs $1000. Yes, $1000 to buy 1 share of Soni's Shawarma, and it only pays us one dollar in dividends every year. What if I told you that one share of Soni's Shawarma costs only $20. $20 for one share, and it pays us one dollar in dividends every year. Which one would you rather pick? I would pick the $20 share that pays me $1, instead of the $1000 dollar share that pays me $1. Why, because it has a greater yield! Yield is simply the dividends we get, relative to the price of the share. That's not a dictionary definition, it's my definition for this case. So now let's calculate the yield of these two options, let's start with the $1000 share. If one share of Soni's Shawarma costs $1000 and In one year, it gives us one dollar, the annual dividend is one dollar. So to calculate the yield, we need to take the dividend, and divide it by the price. So the dividend of one dollar, divided by the price of $1000, equals 0.001, which can also be expressed as 0.1%. So the dividend yield in this case is 0.1%. Now let's move on to the next case. If one share of Soni's Shawarma costs $20 and in one year, it gives us one dollar, the annual dividend is one dollar. Just like before, to calculate the yield, we take the dividend and divide it by the price. So the dividend which is one dollar, divided by the price, which is $20, equals 0.05, which is another way of saying 5%. So that's dividend yield, the dividend relative to the price. The $20 share has a yield of 5%, that means I'll be getting 5% of the money I paid every year. It means 5% of the price, will be paid to me in dividends. With the $1000 share which has a yield of 0.1%, it means I'll be getting 0.1% of the money I paid, every year. It means 0.1% of the price, will be paid to me in dividends. So which one would you rather pick? Would you rather have your dividends equal 5% of the price you paid, or would you rather have them equal only 0.1% of the price you paid. I would rather have them equal 5% of the price I paid, because I get more money relative to the price I paid. If we're only looking at dividends, paying $20 to get an annual dividend of $1, is better than paying $1000 to get that same annual dividend of $1. Remember, stock prices change every day, so that means, dividend yield will also change every day. If its $20 to buy a share that has an annual dividend of $1, it has a yield of 5%. If tomorrow, the price of that same share goes up to $21, then we divide 1 by 21 to get a yield of 4.76%. So as prices change, so does the yield, as dividends change, so does the yield. So now you know what dividend yield is, how to calculate it, and why it's important. If you liked this video, please make sure to hit that subscribe button. Thank you.
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Text Comments (158)
Jeffry Ferdian (12 days ago)
So...during market crash where price per share dropped drastically, but we decided to hold and not selling, means we get more dividend pay. Correct me if I’m wrong.
Soni Bros Investing (10 days ago)
Not sure if you're referring to how much you are getting paid in dividends (which is a dollar amount) or dividend yield (which is a %). The amount of dividends you get paid ($) are completely dependant on the company. They choose how much they want to give to their shareholders. If the market crashes and stock prices fall and they still want to pay the same dividend, then you aren't getting MORE dividends. This only means that your dividend yield will go up because the formula is dividend per share divided by price per share. So if your dividend stays the same and price goes down (since the market crashes), then your yield goes up. Again, this doesn't mean you're getting richer. It just means that your dividend is worth more for the price of the stock. I hope this helps Jeffry. Feel free to reach out again if you need more clarification! More than happy to help 🙏
Nichol McGaughy (13 days ago)
Super helpful!
Soni Bros Investing (13 days ago)
Appreciate the comment Nichol! Hope you continue to watch our content :) more videos are on the way!! Let us know if you have any video suggestions and we keep note of them.
Phuong Vong (21 days ago)
Price went up- dividend % drop. What if stock price went down? Does dividend % goes up?
Luzia Mike (1 month ago)
self trading is bad especially for inexperienced noobs (complexity and risks). pro tips: get a professional account manager like Mr Patrick Brown and trade under his portfolio. that way your profit is ensured while you learn the ropes
Ritik singh (1 month ago)
Good explanation thanks
Soni Bros Investing (28 days ago)
Thanks Ritik for the comment. We appreciate it greatly
erez levi (1 month ago)
first wanna say thanks for the video. second i have question: the dividend yield of AT&T higher than AAPL. but AAPL pay 0.77 cent per quarterly and AT&T pay 0.51 cent. what can i understand from this case? thanks in advance
erez levi (27 days ago)
@Soni Bros Investing thank you very much
Soni Bros Investing (28 days ago)
that the money you're getting in dividends is higher relative to the price you paid for the share. So in your case if the dividend yield of Apple is higher than AT&T, what you get in dividends from Apple relative to the price you paid for Apple stock is higher than what you get in dividends from AT&T relative to the price you paid for AT&T stock
Tahsin Chowdhury (1 month ago)
So even if your shares drastically increased you'd only get 1 dollar? Then what's the appeal?
A J (2 months ago)
Man that sucks it thought the percentage wouldn’t change as the price went up😢
NEWS MC (2 months ago)
thank you, it was really helpful
X S (3 months ago)
$1000 + 0.1% = $1 and $20 + 5% is still only $1 gain right? So either way you go it is the same result/net gain correct, or am I missing it?
Soni Bros Investing (28 days ago)
@Game Awesome Yes, this guy's got it right here. And meanwhile, if you tried the other option, you'd spend the entire $1000 to buy one share, which would only give you $1 dividend every year. So it's probably better to spend $1000 and get $50 a year as opposed to spend $1000 and get $1 a year
Game Awesome (3 months ago)
no, if you have $1000 you can buy 50 shares of the $20 a share company which will give you $50 in dividend
eric man (3 months ago)
Very helpful!
Soni Bros Investing (28 days ago)
Thanks for the kind words!
benzinc (3 months ago)
this is an awesome informative video.. thank you so much!
Soni Bros Investing (28 days ago)
Thank you! Appreciate the comment
Les Landes (2 months ago)
https://global-aktien-team.hpage.com/stocks.html https://global-aktien-team.hpage.com/
Volantem (3 months ago)
Ait so why does netflix shares say they have a 0% Dividened yield?
Soni Bros Investing (28 days ago)
depends what tool you're using to look but either way, it means the annual dividend is..well...nothing. 0.
Ray Mac (3 months ago)
What if a company only shares their yield, does that mean the dividend price would change as the yield stayed constant?
the FunJournal (3 months ago)
You re a hero, nice explanations
Susil Gurung dfm (4 months ago)
Share price is market price or face value price..?
Soni Bros Investing (28 days ago)
if I'm understanding correctly, market price. It's whatever you have to pay to buy 1 share of the company - this number is the share price
So wait i found out that gamestope pay 13.88 % yiel that is equal to almost 14% return every year 🧐
Jose Quiñones (2 months ago)
GameStop is paying that much of a dividend because the company is in big, big trouble. They have no growth and no real future, and most of their revenue goes into paying their dividend to keep their major shareholders from dumping their stock. This means they are not re-investing in the company or getting ready for the future. If any stock pays above 10% dividend yield, it's probably because they are in trouble. Be careful with high dividend stocks. With dividends, slow and boring is your friend.
MrPretends (4 months ago)
Does anyone know what time/time period (of the stock price) is used to calculate dividend yield? Considering prices are always fluctuating...
MrPretends (1 month ago)
Jose Quiñones ahhhh that was the answer I was looking for - set by the board...I’ve been investing for a bit so I understand calculating my own dividend yield and what not, just wasn’t sure how the DISPLAYED dividend yield on a stock was EXACTLY derived but that answered it...thanks!
Jose Quiñones (1 month ago)
@MrPretends Your dividend yield is calculated by dividing the amount of dividend you are paid per share by the price per share you paid, times 100. If you buy at different times, you average out the share price and use that. Your exact dividend yield will depend on how much you paid per share (including brokerage fees) and how much they pay in dividend. Since most dividend stocks pay quarterly and some pay monthly, the term used for dividend yield is always a year. A dividend is never a sure thing. It is declared by the board each term, depending on the financial results of the company. In a good month or quarter, they may raise dividend or leave it the same. In a bad month or quarter, they may lower or even cancel the dividend. If you are an active investor, you must constantly be monitoring your investment's performance. If you want simple, you go with an index fund like a Vanguard 500 Aristrocrats ETF, which puts your money into a "basket" of dividend stocks and rebalances as necessary. The risks are lower, but so are the rewards.
MrPretends (1 month ago)
Jan 5th 2018*
MrPretends (1 month ago)
Jose Quiñones my question is more of how is it measured regarding the time of the price of the stock. I know it is a yearly yield as almost anything is unless stated otherwise. Example: dividend yield doesn’t change when the price of a stock fluctuates through out the day (at least not on the exchange I used) if I look at an exchange on January 5th am I looking at the dividend yield that was derived in 2017 based on the closing price? That’s more of what my question means. In other words from what time period is it derived...
Jose Quiñones (2 months ago)
It is per year, as he explained.
gordo33 (5 months ago)
Question. I work at home depot 1% of my check goes toward home depot stock and 15% off current price. Any how have already a good amount saved up but I have never got paid (dividends) or anything.. how do I get paid???
Jose Quiñones (2 months ago)
Home Depot has paid a dividend every quarter since 1987. The likelihood is that your dividend has been automatically re-invested into the stock every month, which is good by the way. It means you are getting compound interest on your stock (i.e, each dividend grows and starts making more, which grows exponentially). It is like credit card debt, only it is working in your favor. So find out who your brokerage is, take a look, and you might be in for a very nice surprise! However, you don't want to have your entire nest egg in one single stock, so look into taking those stocks and diversifying. You can easily put them into a basket of thousands of stocks called an ETF. You are probably part of a Home Depot 401(k) or something, so see about rolling it over into an IRA at a reputable place like Schwab or Vanguard or the like. Or you can even use an easy app like Acorns! This lets your money grow without paying taxes, and lowers the risk that one day Home Depot makes a huge mistake and all your stocks go to zero. It's your money, so put it to work for you and diversify.
h7opolo (5 months ago)
so, the yield is just a ratio between stock price and annualized dividend amount. This info is useful when compared to other stock's dividend yields in determining which stock to buy.
mariam tarek (5 months ago)
damnn i actually understood this ,thanks
Crazywaffle5150 (5 months ago)
So it's about I get back in total within a full year? So if the Div/yield is 1% of $100 is shares. I get back one dollar a year per share?
yow you did a awesome job man . congrats man
Soni Bros Investing (25 days ago)
Thank you for the support! I'm glad the video helped :)
Sivash Persaud (6 months ago)
Thanks much :)
Thanks a lot. Hope you upload more videos. God bless
Soni Bros Investing (28 days ago)
We're getting back to it! We just uploaded a video on how to check bonds so hopefully that helps you!
Cornelio Jerez (8 months ago)
Beautifully explained
Singgeek (9 months ago)
I'm in accounting and it's kicking my but :D This is such a nice, clear explanation. Really appreciate your videos!
Sovon Biswas (10 months ago)
I'm subscribing for sure!!!!!
Brandon Meadows (11 months ago)
Am I the only one looking at this math thinking how tf has he ever made any money
Gaukhar Murzagaliyeva (1 year ago)
Great video, thanks! You explain everything very easily, I love it :D By the way, I've just come across this article about which ratios investors should focus on before investing https://www.stockmetrix.net/blog/post/070318/5-most-accurate-financial-ratios?t=gauYT#17g, and I think it's pretty helpful. What do you think?
freedom77 (1 year ago)
So if you have 5 shares or 2000 shares you just multiply?
Tenzin Kunsel (4 months ago)
So if I put $10000 on coke and buy it for $45.7 then I get 218 shares then multiplayer buy 0.035 then I get only $7.65 annually that’s sad or did I do the math wrong.
Daddys Fastest Swimmer (7 months ago)
Yes multiply the dividend. The yeild stays the same.
Mohammed Ahmad (1 year ago)
I wish my stupid finance professor can see this video. Thanks for sharing Soni.
tatertots00 (1 year ago)
So on Robinhood Procter&Gamble the price is $77 and it list the dividend yield as 3.096. Does that mean 3.096% of the stock price(whatever that was the end of each quarter) was paid out over the last 4 quarters. When they say P&G has increased their dividend every year for several decades they mean it increases each quarter or each financial year or what?
Joheb Abedin (1 year ago)
If you are planning for investment in dividend stocks and looking for high dividend yielding stocks? Get the detailed list of good Dividend Yielding Stocks categorized in terms of sector and industry specific at https://www.agrud.com/analytics/us-equities/highest-dividend-yielding-stocks
EMB 2017 (1 year ago)
straight to the point... another subscriber
grnLogic k (1 year ago)
So does the dividend go to your bank account or something? And then you can still sell that stock when you want possibly for a profit in the future also?
David Perrone (6 months ago)
I know you made this comment ages ago, but if you don’t reinvest the dividend you’re liable for paying taxes on it since it is considered income. It’s taxed at around 15%.
1pyroace1 (7 months ago)
Reinvest the dividends
Marcus (10 months ago)
Depends on the broker. Some allow you to immediately reinvest the dividend in the same fund OR deposit in your bank account. If you're young, reinvest that bitch.
Khandsuren Orgodol (1 year ago)
very helpful, thanks
Makaveli ThaDon (1 year ago)
Thanks so much brother!
linni smith (1 year ago)
you've provided clarity to a subject that I've been trying to understand for a LONG time thank you!
Brian Velez (1 year ago)
How am I just finding your channel now! Thank you so much!
Soni Bros Investing (25 days ago)
Thank you Brian! It's been a while but we're back at it. Appreciate the support!
Stav7 (1 year ago)
so what stops a company from changing their dividend yeid to something really high like 200%, so everyone buys their stock and then change it back to say 0.000001% ?
Bry The Nice Guy (3 months ago)
That's unrealistic because it would mean that the company is paying twice as much as the price for each stock you buy. They simply don't have that kind of money and it is physically impossible for them to pay that much.
alex (1 year ago)
I dont understand why college professors cant explain it this easy. They try to complicate and explain every single thing which confuses us students.
Ahthesham Sheikh (1 year ago)
Excellent simple explanation. That background music however is irritating man..
Ravi Teja M (1 year ago)
superb explanation bro....
Veer Singh (1 year ago)
Amazing
Adolph Lopez (1 year ago)
now I'm learning more, and more, and that is the more I've watch.
Adolph Lopez (1 year ago)
and to see you and your instructions over and over again to get more of your instructions again, as more of it's instructions more clearly.
Adolph Lopez (1 year ago)
ooooooohhhhh!!!!!!!! okayyyyyy!!!!!!! now I've got your instructions. and I'm going to have to see you and your instructions repeat, as over and and over again to really get your instructions more clearly.
Davy Seng (1 year ago)
Your awesome bro!
Arcade Maximum (1 year ago)
Thks new sub and dint need college for it lol
Awesome. Thanks
Nagendra Gupta (1 year ago)
Very nice explanation but stock giving high dividends has a negative side because they will not have business expansion. Please also explain dividend % in the video.
Le Plaisir XXL (7 months ago)
https://global-aktien-team.hpage.com/stocks.html
Marcus (9 months ago)
Nagendra Gupta “not have business expansion”. Not true. They may be less likely to expand since they’re paying dividends but you can’t say all companies will not expand.
Hanz Oyst (1 year ago)
Brother you are awesome !
Bryan Francisco (1 year ago)
Nice man!
Dcffv Gfcgf (1 year ago)
To anyone reading this comment, that has just finished watching this video, I tell you to be cautious and smart with your money. Yes you could find cheap stocks with high dividend yields but, cheaper stocks are normally riskier as they may not come from a well established company. The rewards are higher but you also risk losing it all. Opposed to making a safe investment in a bank. Not to say don't make risks, but make calculated risks. Don't just invest all your money in Sonis shawarma because it has a better dividend yield.
Ibrahim Munir (1 year ago)
Thank you for making these vids it's a great video. Great work.
hank shaw (1 year ago)
You didn't include the risk that is coming with higher yields. So it's not objective to say that it's smarter to go for the 5% dividend yield. But this is a good example of how dividend yield works. :)
Karen Wanas (1 year ago)
After weeks of listening to yields.... you explained this perfect in a minute
God's Advocate (1 year ago)
Wow great videos!! Very well articulated.. i know that dividends are not guaranteed .. but which companies gives good monthly or quarterly dividends? Which 5 would you recommend
Doctor Rafa (1 year ago)
Awesome! thanks! Thats almost like the p/e ratio?
Illmatic88 (2 years ago)
So while yeild is a nice bonus.. its not nearly as important as the potential share price increase is it??
Dione Arnold (4 months ago)
Share price increase does nothing for you if you are keeping the stock long term for dividend payouts.
Le Plaisir XXL (7 months ago)
https://global-aktien-team.hpage.com/stocks.html
Mohamed Aisset (1 year ago)
Illmatic88 agreed
Jahsiah Kidd (2 years ago)
Anyway I can get a link to that audio?? lbs
Yahya Silk (2 years ago)
EXCELLENT AND VERY CLEAR DESCRIPTION. GOD BLESS YOU
arseniclullaby87 (2 years ago)
and the dividend yield % gets multiplied by the amount of shares you have?
St. Ord Jacobs (2 years ago)
Just for clarity, are dividends paid per share, or just a percentage of the totals funds invested with the company?
xDarumax (10 months ago)
its per share
Yulian Gonzalez (2 years ago)
dividends/ by price you bough the shares or current price?
DAVID 02301 (2 years ago)
what is the meaning of P/E and do you have a video on that please let me know
86andyD (2 years ago)
Thanks mate. Helped out a lot
Tony John (2 years ago)
Like being in a class with the radio on .
QI ZHANG (2 years ago)
Great explanation. Although I'm an international student and my English is not good, I know this concept very clearly now, thanks a lot!
Family Fax (2 years ago)
Great explanation. Thanks again!
Tha2ReedsFitness (2 years ago)
I like how you broke it down sub me I sub you..
iim_human (2 years ago)
This explains things great on how to align the math to make sense of the percentage. My question is, when I am looking at Nasdaq or any other indexes, how do you find out the dollar amount the percent translates to to then do this math to explain the percentage.
slinkkk crown (2 years ago)
How is 0.05 is 5% and 0.001 is 0.1 ?
Joshua Smith (1 year ago)
X100
nm Oq (2 years ago)
go back to school
sihle madlakana (2 years ago)
thank you so much!👍
SuperVillian SVWorld (3 years ago)
great video you got a new subscriber
Harry Rooney (3 years ago)
This is brilliant thank you!
Prince Muraguri (3 years ago)
This is an amazing video!
Wil Wiggs (3 years ago)
THANK YOU lol! I'll be back just started investing
ISURI RIDMIKA (3 years ago)
It's super.Thank u.
Fatima Rana (3 years ago)
so helpful!
Enrico Castelli (3 years ago)
super clear. thanks.
sira M (3 years ago)
wow Amazing job. You made dividend and dividend yield sound so easy. You should have been my prof in College. I always struggled with Econ and Calc. And here you explain things as if its just a piece of cheese cake :D I watched two videos of yours and I am hooked.
JESSE OMANDI (3 years ago)
woow! cool. super one
Kamaal (3 years ago)
Thank you I finally understood it
Tsvetomir Iliev (3 years ago)
lol I can't find any videos that explain WHERE to buy dividents, they all explain what is a divident.
xxFairestxx (2 years ago)
Tsvetomir Iliev you don't buy it. It's the payout
Tsvetomir Iliev (3 years ago)
@Martin Leon del Fierro i mean online bye
Martin Leon del Fierro (3 years ago)
+Tsvetomir Iliev in any bank or investment firm, is not that hard. thanks for your replay. bye.
Tsvetomir Iliev (3 years ago)
@Martin Leon del Fierro yes I understand that, do you want to know where to buy a share?
Martin Leon del Fierro (3 years ago)
+Tsvetomir Iliev you don't buy dividends, you buy shares with options on dividends, (the dividend always depends on the results of the company). You get a dividend if you own a share that pays dividends.
Mazhar Soufi (3 years ago)
thnx
jouma jadia (3 years ago)
with respect your math is correct. however case on it is not correct your result ended with dividend yield of 0.001 so far nothing wrong but you stated this will be 1% which is not correct. this means you will get $1 for each$ 1000 you invest. if you say 1% it means you will get $1 for each $100 you will invest.
michael florence uera (3 years ago)
thanks alot bro. it helps to my study
nathdos (3 years ago)
That was awesome. . So much for this large book
MGallear9 (4 years ago)
so i'd have to wait 20 years before i make my investment back, dafuq?
Dr Dickinson (4 years ago)
You will evenctully sell that stock
Nurlan Ahmadli (4 years ago)
thanks for the video guys
Nirlap Mann (4 years ago)
does this mean A higher dividend yield ratio always increases the wealth of a shareholder
Evan Shlom (2 years ago)
No growth stocks are also a thing where the payout ratio is 0...but you might know that 2 years later lol
Rizwan Ali (4 years ago)
i agree with u big words in simple terms ur awesome such a hectic chapter is done in 0:57seconds
Jerome K (4 years ago)
If only it was this easily explained in school..too bad college is non refundable
Soni Bros Investing (25 days ago)
This is part of the reason why this channel started 😂
Vesta Dynasty (4 months ago)
lmao 3 years later is true
Le Plaisir XXL (7 months ago)
https://global-aktien-team.hpage.com/stocks.html
cenemoh 2002 (9 months ago)
@Marcus great comment! :)
Marcus (10 months ago)
College is a waste of time and money. Too many women. They beg for safe spaces, easier tests, and bully you if you don't help them on their STEM homework. Go to Trade School. $60K/year as an Electrician. No women to bother you... Heaven.
Iven Tu (4 years ago)
excellent!
Lucy Luce (4 years ago)
Literally going to pass my Accounting class thanks to you. :')
apriljones1971 (4 years ago)
Helps Me! Thanks!
Zee Nnna (4 years ago)
Great video... and very helpful.... found it in time for exams... Great job man!!!
Wesley95501 (5 years ago)
Why would you use the word "years"? I just started looking at stocks and its dividend yield a few days ago and, this video is no where near helpful. I still don't understand how dividend yield works.

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