It is quite important term to be used by the investment professionals and being an investment holder one should be able to understand quite clearly that what dividend yield means in UK and how it can impact your total earnings earned by purchasing shares of FTSE 100 Stocks listed company or organization here in UK. Dividend Yield is also referred as Dividend Price ratio in UK. It is basically defined as a financial ratio that shows that how much a company pays to its shareholders in terms of dividends each year relative to the price of its share. In a Laymen’s words simply it’s the ratio of annual dividends per share to price per share.
It is basically a measure which defines how much cash flow one person is getting for a single dollar investment. So it is often advised to investment professional in UK who wants to get a minimum cash flow from their investment portfolio to invest in such stock who pay relatively high and stably dividends yields in UK.
To understand the concept better let’s take an example and there are two companies i.e. A and B. Now assume that both companies provide the $2 dividend per share respectively. Now suppose there shares are trading at 20$ and 40$ then Dividend Yield for A and B would be 10% and 5% respectively. It simply means considering all the other factor same investors will be likely move towards company A for investment because A has high Dividend Yield. Many investment professional compare the dividend yield while choosing any FTSE 100 dividends paying stock company in UK. As we all know that FTSE 100 is the indices reserved for Top 100 organization performing well then in such cases knowing what dividend yield is and making it a factor in deciding which company you should go can be really important factor.
Dividend Payment is done on dividend dates on Preference Shares in UK are set out using in financial disclosure document which describes the financial security for potential buyers.