In this article we will talk about dividends that focus especially on the calculation of the dividend yield. Commonly, companies that have a high dividend yield, They present greater buying opportunities compared to companies that have a lower index, this is because investors normally value that a safe profit is distributed to them and that this is above what the stock is valued in the market.
To begin, we will make a short summary of the definition of dividends, and it is known as the individual right that corresponds to each of the partners to receive an economic benefit, on a regular basis, from the profits obtained from the society.
The dividend yield or the yield for each dividend, It is a financial ratio in which, by means of percentages, an existing relationship is represented between the dividends that are paid by a specific company to its shareholders in a period of time, which is usually the last year, and the The cost of the share can also be calculated with the estimate of the profitability for the following year, but this can lead to various distortions of the ratio, this is due to the lack of security regarding their distribution.
For this reason, dividends are a fundamental part of the profits in the company and during a certain period of time, they are delivered to the shareholders an amount in proportion to the number of shares they own.
When a company manages to obtain benefits, there is a General Assembly which decides if this money is reinvested in the same company or if it is paid to the shareholders in the way of dividends. Companies with more stability tend to choose breakeven points in which a part is invested and the rest is paid in dividends. On the other hand, growing companies do not usually distribute dividends, this is because they reinvest the profits to be able to sustain their own growth and also have the ability to offer shareholders a much higher price for the shares.
Payment Methods
Dividends must be paid and this option can be done in two ways, which are as follows:
- In shares: for each share that the shareholder owns, he must receive a certain number of shares. This form of payment is also commonly called as capitalization of results, this is because it increases the social capital that the company has.
- Cash: for each share owned, a certain amount of money will be received, which will be previously agreed upon by the management of the company in question. This form of payment involves many factors, one of them is that the assets of the company are reduced.
On the other hand, you can pay out a dividend to a future profit account, but this is only possible in the case where there is sufficient liquidity to do so.
It should be noted that, due to the aforementioned, only the ordinary dividend should be taken into account (leaving aside the extraordinary one) since, in this way, the company is valued better.
As we mentioned, dividend yield It is one of the financial ratios most used by shareholders for the valuation of a share. It is necessary to consider that the profitability that is expected by an investor who acquires a share so that it can proceed in the revaluation of the same, as well as the dividends that have been received. Also related to this issue is the existence of the pay out ratio, which reflects the percentage of the profit in the company that is distributed as a dividend.
The companies that are in charge of regularly distributing dividends usually have some specific characteristics, because otherwise, additional capital would be necessary to finance their expansion at the expense of the shareholders.
By way of explanation, in this article we can know a small introduction of what they are dividends, as well as their forms of payment. In addition, the profitability issue making a parenthesis in the characteristics of the companies that are in charge of distributing the dividends in the pay out ratio, which is also very useful to be able to decide in which company it is in which shares should be bought.
It is said that Dividend shares are the main attraction on the Spanish stock market. It is not known for sure if the oldest, but it sure is one of the largest. At least that has ensured stock market reports in Spain. But you will surely ask yourself, if the country's market has to boast, and the answer is that apparently yes. For the last 10 years, the Spanish stock market has been the leader in terms of dividend yield, making a comparison with the rest of the stock exchanges in the developed world. It has only been highlighted in the first two months of the year that listed companies in the country have already distributed around 3.500 million euros in dividends to shareholders. Which sounds pretty good.
But, if the question is whether wallets perform better with companies with high dividend yields, the answer could seem quite obvious if it is observed that the reinvestment of dividends distributed by companies and why this index that contemplates the reinvestment of dividends distributed by companies. But this distinction is necessary for the following reason; When a company pays dividends, prices drop and the index creeps, which is why, if we take into account the impact of dividends, we could say that the aforementioned index will make a representation much closer to the behavior of the stock market.
The powerful effect of dividends on the returns of a long-term investment it's amazing. Well, this is because in 2017 a good load of dividends was promised to come and that is how it is today. For this reason, we will list some companies that have paid the most to shareholders this year.
Electrical network
This Electric company, has not been left behind as it offers a dividend yield of approximately 5,03% as well as a profit per share of 1,24. With this revaluation potential, which exceeds 8% and a target price of 19,50 euros, the shares of this Red Eléctrica have a recommendation to be maintained by various analysts consulted. From a technical point of view, these experts have reached various conclusions and one of them is that it is necessary to overcome the resistance of 19,93 euros in order to bias the intermediate terms upwards.
Enagás
This company has a dividend yield of approximately 5,95% and also a profit per share of 1,00 euros this year. The consensus of the analysts has considered that the value is an option that must be kept in the portfolio, so that in this way, a revaluation potential is known that is above 10% as well as a target price of 26 euros.
Repsol
The Spanish oil company offers a dividend yield of 5,97% and also a profit per share of 1,35 euros. According to studies carried out by expert analysts, Repsol has a buy recommendation among shareholders and could have a potential to be revalued by 6,422%, with a target price of 14,500 euros.
Mediaset
In 2017, the Mediaset company is offering the shareholder a 5,32% dividend yield and has a earnings per share of about 0,61 euros. the aforementioned company has a system that can be subject to revaluation. Well, the stock could even reach a potential revaluation of 12,15% as well as a target price of 12 euros.
Endesa
The Endesa company is one of the companies that has managed to offer a higher return to its shareholders within the ibex35. Its dividend yield is 6,56% in this 2017 and it also has a profit per share of 1,26, so the consensus of the analysts who have been consulted is that the company be given a recommendation of maintain in portfolio and a target price of 20,25 euros, this is supposed to be reflected in a potential revaluation of 0,596%