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  • The Ten Highest Yielding NYSE Stocks [View article]
    "Itsonlymoney" .... The reason there is a difference in the above dividend quote and that of Yahoo Finance is how different sites calculate the dividend yield.

    Yahoo apparently takes the last dividend and multiplies it by the number of payments per year to get $3.40 and divides it to come up with the 11.9 % yield you noted.

    The figure quoted in the article takes a slightly different tack... They add up all the **real** dividends and divide to come up with a 'yearly' dividend.

    So: 51+58+60+85 = $2.54 total dividend for the year.
    $2.54/$30.70 = 0.082736156351792% ...

    Or as of right this moment about 8.3% yearly yield.

    If you have an MLP or paying stock that issues regular as clockwork payments (such as ADVDX at 14%), you can get by with using the last payment. The idea is that if the payments increase, then it is expected that the future payments will be the same.

    The problem arises when you have a stock or MLP that varies their payments. In the case of shipping and some energy or mining stocks (HTE comes to mind), a drop in business climate might cause a marked drop in the expected payments and you cannot trust the last payment to continue. Sometimes MLPs etc have special payments as well which throw off the calcs. These payments can be separate, or included at the same time as the regular dividend. You can see that by blindly using the last payment as a means of calculating your returns is not necessarily effective.

    So... Regular paying stocks, you can normally use the last payment to calculate. Irregular paying stocks, or those that vary seasonally, it's probably better to use the yearly.

    And it doesn't hurt to inspect the dividends over a few years and in conjunction with established companies with a longer track record. I find it best to go to Yahoo Finance's interactive chart, pull up a three year range and click on 'show dividends'. This way I can see how the dividends compare to the stock price over a period of time. It could alert you to a cyclical short dividend on the horizon.

    jegan ;-)

    Jul 31 13:52 pm |Rating: 0 0 |Link to Comment
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