Shareholder Yield Measures All Company Distributions
AAII Dividend Investing seeks out companies that have a shareholder focus exhibited by distributing excess cash, preferably through consistent and increasing dividends. Dividend increases are an important signaling device. Higher dividends provide a signal to the market that the company is confident in the stability and growth of future earnings.
The dividend yield is the most common way to measure the dividend level over time and across a range of companies. The dividend yield is calculated by dividing the indicated dividend by the current stock price. The indicated dividend is the anticipated cash dividend payment over the next year. Since most U.S. companies pay dividends quarterly, the indicated dividend is normally the latest quarterly dividend times four.