Dividend Yield Essentials

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Dividend Stocks Research
Dividend Yield Essentials
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• Hi, My name is Aaron and Im with Dividend Stocks
  Research, today were reviewing our recently
  published article

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• Dividend Yield Essentials

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• Do you know how much we spend on Christmas lights
  and decorations?
• 6 billion a year. By comparison, the Pentagon
  spends about 12 billion for an aircraft Carrier
  like the USS Ronald Reagan.

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• The numbers are staggering, so huge theyre hard
  to make sense of. I like simpler numbers where
  the arithmetic is easy, and thats one of the
  reasons why Im so fond of dividend stocks.

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• The arithmetic behind the yield is about as
  simple as it gets.You divide the amount of the
  dividend by the stock price and youve got it.
  The yield is expressed as a percentage.

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• And once you know this number, youve opened up a
  whole new way of finding the best dividend paying
  stocks.
• Let me give you the 3 dividend yield essentials.
  

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• Then well use them to find the kind of highly
  profitable dividend stock a lot of people chasing
  high yield would overlook.

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• Dividend Yield Essential 1

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• Chasing high dividend yield, and buying the
  highest dividend stocks, wont always get you the
  best return. Yield constantly changes. Remember,
  the price of the stock is one of the two factors
  that determine the yield.

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• When the stock price goes up, the yield goes
  down. And when the stock price goes down, the
  yield goes up. This means that a company in
  trouble, where the stock price is tanking,

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• will be paying a higher yield, even if it keeps
  the dividend the same. If a stock trades at 50
  today and the yield is 4, the yield goes to 8
  if the price of the stock falls to 25 and the
  dividend payment stays the same.

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• If a stock trades at 50 today and the yield is
  4, the yield goes to 2 if the price of the
  stock goes up to 100, and the dividend payment
  stays the same.

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• Heres some more simple arithmetic that can keep
  you focused on the best high yield stocks.

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• Dividend Yield Essential 2

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• When the dividend payment goes up and the stock
  price stays the same, the dividend yield goes up.
  This is why dividend growth is such a big deal
  for investors.

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• Stock yield matters more when you see growth that
  comes from the increase in the dividend, and not
  the decline in the share price. How much dividend
  growth is good?

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• It changes all the time. Back when the market
  was going through so much trouble in 2009, there
  wasnt any dividend growth because so many
  companies were cutting dividends.

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• These days, annual dividend growth of at least
  10 is good.

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• Dividend Yield Essential 3

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• There is no exact definition of high yield
  stocks. As a rule of thumb, when you get into a
  yield thats 10 or higher, youre in dangerous
  territory.

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• Its usually safer to wait for a low yield to
  grow, which turns it into a high yield for you.
  Its how you put the power of compounding to work
  - so over time so you build a portfolio of the
  best high yielding stocks.

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• Want to see how this works, and how profitable it
  can be?

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• How A Low Dividend Yield Turns Into A High Yield

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• Let me introduce you to a dividend stock that
  pays an embarrassing yield...much less than 1.
  Most dividend investors wouldnt give this ugly
  stock a second look.

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• And while Im not suggesting you run out and buy
  it, theres a profitable lesson to learn from
  this virtually unknown company based in Murray
  Hill, NJ (Exit 44).

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• The exact yield for this company might be higher
  or lower depending on the day you read this, but
  today, the yield is .51. Yup...just over half a
  percent.

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• C.R. Bard BCR is the skinflint of the SP 500
  Dividend Aristocrats, the lineup of Americas
  safest, strongest, and most dependable dividend
  stocks. As I write this, no Aristocrat pays a
  lower dividend than C.R. Bard.

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• But heres the thing. Only a handful of
  companies make the cut and get to be Aristocrats.
  These large cap companies have been growing
  their dividend for at least 25 years.

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• It sounds easy but its not. And C.R. Bard has
  managed to pull it off for 43 years. For the past
  3 years, the annual growth in the Bard dividend
  has been 5.1.

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• These numbers arent terribly exciting. Not at
  first glance. But they are extremely important.
  Lets say you bought Bard 3 years ago. Youve
  got your 5.1 dividend growth. And youve also
  got a stock thats been doing very, very well...

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• At the beginning of 2013, this was a 103 stock.
  Today it trades at 187. Thats 26 annual growth
  in the price of the stock, on top of your
  dividend. Low yield doesnt mean you always get
  this kind of stock price growth.

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• Theres not a connection. But it does mean that
  like you learned in Dividend Yield Essential 1,
  when the stock price goes up and the dividend
  stays the same, yield is driven down.

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• At Bard, the dividend actually grew at 5.1 a
  year. And if you took the money from your
  dividend payments and bought more stock, you
  would have made out even better.

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• Its a great example of how dividend reinvestment
  plans really work. So you come out a winner 3
  ways capital appreciation from the increase in
  value of your shares, the dividend growth,

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• and the extra stock you add to your portfolio
  when you reinvest the dividends. But if you never
  even think about a stock like C.R. Bard because
  you think the yield is too low, you miss out.

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• Now that you know the essentials of yield, you
  can go find your own C.R. Bard. And if youre
  wondering where to start, check out the low yield
  stocks on the lineup of the SP 500 Dividend
  Aristocrats.

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