Course 306: Dividend Yield
Who Has High Dividend Yields--And Who Doesn't
In this course
1 Introduction
2 Dividend Yield Measures Dividends
3 Who Has High Dividend Yields--And Who Doesn't
4 The Tale of Shrinking Dividend Yields
5 High Dividends = Good Defense

 

Stocks with high dividend yields tend to belong to mature companies with few growth opportunities. Because the companies can't make much by investing profits in growth, they pay those profits back to their shareholders in the form of dividends. Utilities, with an average yield of 4.3% at the start of 2000, are classic dividend-paying stocks; as regulated monopolies, they have limited room to grow. Real-estate investment trusts, or REITs, also tend to have very high yields; by law, they have to pay out most of their profits to shareholders. 

On the other hand, rapidly growing companies, such as Microsoft MSFT and Intel INTC, generally pay few or no dividends. That's because they're reinvesting their cash flow into their businesses so they can continue to expand. In fact, 95% of technology companies don't pay any dividends at all. 

Next: The Tale of Shrinking Dividend Yields >>


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