How Does Dividend Yield Compare with Other Metrics?
Dividend yield should not be evaluated in isolation. Comparing it with other financial metrics provides a more comprehensive view of a company’s performance. For example:
Earnings Per Share (EPS): Indicates profitability and can help assess the sustainability of dividends. Price to Earnings Ratio (P/E): A high dividend yield but low P/E might indicate an undervalued stock. Return on Equity (ROE): Shows how effectively a company is using equity to generate profits, influencing its ability to pay dividends.