Next is the dividend yield ratio. A financial ratio that shows how much a company pays out in dividends each year relative to its share price. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position – in other words, how much “bang for your buck” you are getting from dividends. Investors who require a minimum stream of cash flow from their investment portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend yields.
The last ratio is to consider is the growth ratio. The amount of increase that a specific variable has gained within a specific period and context. For investors, this typically represents the compounded annualized rate of growth of a company’s revenues, earnings, dividends and even macro concepts – such as the economy as a whole.
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