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What Does the Dividend Yield Tell the Investor?

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What Does the Dividend Yield Tell the Investor?

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Dividends can be a significant source of income for investors. The dividend yield is a measure for determining how much income a stock provides. However, very high yields can be a sign of an unsustainably high dividend that is likely to be cut. New Stocks and Growth Stocks New stocks and growth stocks tend to have small dividends (or no dividends) and in turn low or no yields. This does not necessarily mean that the stock is a bad investment, though. Money that is paid to shareholders as dividends is money that cannot be used to grow the business. If the business is new, the benefit to the shareholder by using the money in the company to improve profits might outweigh the benefits of a dividend. An investor should assess each company on a case-by-case basis to determine the viability of a company, even when it does not issue large dividends. Established Industries For more established industries, dividends are much more common. This is especially true of industries that generate a lot

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