Measures of Dividend Policy - NYU Stern
Measures of Dividend Policy
154
? 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.
Aswath Damodaran
154
Dividend Payout Ratio: January 2017
155
18.00% 16.00% 14.00% 12.00% 10.00%
8.00% 6.00% 4.00% 2.00% 0.00%
100%
Aswath Damodaran
155
Dividend Yields: January 2017
156
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
Aswath Damodaran
156
157 Aswath Damodaran
Dividend Yields and Payout Ratios: Growth Classes
158
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
Aswath Damodaran
158
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