Dividend Yield

Dividend Yield = Dividends per annual stock * 100

Market price per stock

The importance that is assigned to this indicator depends on importance the investor provides to the payment of dividends. Many investors think that stable dividends in time are an indication of financial strength in a company. But this reasoning is not necessarily accurate, since the paid out dividends are the reflection of the pay out policy of the profit that is approved by the company board. It often times occurs that even though the profits have been reduced, the board can decide to maintain a stable amount of the dividends that are paid out, as an interim of future profits, with the objective of projecting a solid image to their investors. it can also occur that even though the profit has gone up, the board decides to keep the same amount of dividends. Just like with RPU, there is not an exact correlation between this indicator and the quality of the investment.

Stock exchange value / asset value
In simple terms, the Asset Value of a stock is the amount of money that a stockholder can aspire to receive, if the tangible assets of the company were sold at the value they appear to in the balance sheets after having paid the liabilities. The price of a stock in the market is compared with its asset value in order to determine its position as far as its “real value”. It can sometimes occur that the price of a stock is below its asset value. The fundamental analysis interprets this situation as a sign of purchase, since the company would be transiting to a lower value then the net value of their assets. When a stock of this sort is invested in and by holding onto it for some time, the investor will eventually be able to obtain a gain if the price increases to adjust the index of that determined sector. Many new companies or those that are going through rapid growth tend to have high asset value. Some of these companies do not have stable cash flows compared with the older companies, and need to reinvest their profits given that they do not have the credit facilities that others do, instead of paying them as dividends. Therefore, the asset value can be wrongly interpreted as being an increase in the assets. As we can see, the job of the fundamental analyst is not all that sure and easy, and the efforts that need to be carried out to capture the real situation of the companies in its real essence are very great.

Beginner Money Investing Two Schools for Market Analyzing The Fundamental Stock Exchange Analysis Relation Price/Profit Dividend Yield Stock Exchange Technical Analysis Clever Money and Naive Money Technological Advances and Research Diverse Investment Values Market Research Market Dividends Confusion Regarding Dividends