Distracted by high dividend yields

In an investing world that seems almost maliciously unpredictable, dividends are a true friend to investors. That’s why so many financial experts are telling people to focus on dividend stocks these days. Smart dividend investing requires some discipline, however. This is especially true in the area of yield, which is a term that describes the rate of return you get from the dividends paid by a stock. To calculate yield, divide the annualized dividend by the share price and multiply by 100.

Dividend yields move inversely to share prices, which means a high yield is a sign investors are worried about a stock and are selling their holdings. MTS had a yield of about 9 per cent before the dividend cut was announced. By comparison, the yield on the S&P/TSX 60 index of big blue-chip stocks is about 2.8 per cent.

Source: Globe and Mail

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