Measures of Dividend Policy - NYU Stern

Measures of Dividend Policy

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? Dividend Payout = Dividends/ Net Income

? Measures the percentage of earnings that the company pays in dividends

? If the net income is negative, the payout ratio cannot be computed.

? Dividend Yield = Dividends per share/ Stock price

? Measures the return that an investor can make from dividends alone

? Becomes part of the expected return on the investment.

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Dividend Payout Ratio: January 2017

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18.00% 16.00% 14.00% 12.00% 10.00%

8.00% 6.00% 4.00% 2.00% 0.00%

100%

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Dividend Yields: January 2017

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Dividend Yields at the start of 2017: US & Global

0.16

75th Perc.

Broad Group

25th Perc. Median 75th Perc.

0.14

Australia, NZ and Canada

1.77% 3.39%

5.09%

Developed Europe

1.62% 2.84%

4.68%

0.12

Emerging Markets

0.88% 2.27%

4.62%

Japan

1.33% 2.08%

2.81%

United States

1.17% 2.12%

3.47%

0.1

0.08

0.06

0.04

0.02

0 8%

US Global

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Dividend Yields and Payout Ratios: Growth Classes

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50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00%

5.00% 0.00%

0-3%

Dividend Yields and Payout Ratios: By Growth Class

4.00%

3.50%

3.00%

2.50%

2.00%

1.50%

1.00%

0.50%

3-5%

5-10%

10-15% 15-20% 20-25%

>25%

0.00%

Dividend Payout ratio Dividend Yield

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