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Lesson 14. How to Check Your Investments > Reading the Stock Tables - Pg. 86

How to Check Your Investments 86 Using the preceding information, we can look at AT&T's listing on our example. The Dividend per Share column lists .88 as the projected dividend payment for the year. For the purposes of our example, we will assume we know that AT&T pays its dividends quarterly (they do in real life, too, by the way). By dividing .88 by the four dividend payments (the one that has already happened and the three that are still outstanding for the year), it is safe to assume that AT&T paid out about .22 per share in dividends last quarter and presumes it will do the same in the next three projected quarters. It's true that the dividend payments could have been projected as 22 + 20 + 22 + 24; however, this particular measurement of a stock's dividend health assumes that the issue of im- portance is the total annual dividend payment. Notice in the example that the space in the Dividend per Share column is blank next to Abercrombie and Fitch. That is because not all stocks pay dividends. It would be a pretty safe bet in this example to assume that Abercrombie and Fitch is a growth-oriented company that is reinvesting all its profits back into the company rather than paying them out to shareholders. That makes Abercrombie and Fitch stock a growth stock. Yield Percent The column to the right of the Dividends per Share column is the Yield Percent (or Per Cent Yield) column. The figure within this column indicates the stock's value in relation to its current price and annual dividends--or the percentage of return based on the stock's closing price. The Yield Percent is calculated by dividing the dividend amount in the Dividends per Share column by the amount in the Close column (second column from the right). Plain English The Yield Percent provides the ratio of dividends paid by a stock to its closing price. With this figure, investors can calculate the amount of income generated by the stock relevant to its initial investment requirement. Please notice that the information in the Yield Percent column could be easily calculated by using information contained elsewhere in the table. The fact that a table, which is already so crowded, should make room for the calculation of an equation for its users is an indication of both the impor- tance and the popularity of the Yield Percent figure. The information contained in this figure differs from the Current/ Dividend Yield discussed in Lesson 12 primarily in its usage. As a result of the stock being actively in play from the investor's perspective, this figure provides not only a more current and fluid view of the stock's value, but the opportunity to distinguish and spot trends and evaluate the stock's performance as well. While a stock's Current/Dividend Yield is but one figure, changes in the performance of the Yield Percent provide daily figures that can be charted or compared at regular intervals. This information can then be used against the initial amount projected by the company for the year's dividends. That information can enable the investor to adjust future projections by the company to calculate a more reasonable, and often a more accurate, projection. Caution Always compare how well the stock really did with what the issuing company said it would do. If the company continually aims high and falls short, future quotes are probably inflated. Should the company's quotes continually prove overly conservative, you would also adjust accordingly. It is important to reemphasize that the Yield Percent is dependent on the decisions of the manage- ment of the stock's issuing company. The company can choose to pay dividends at whatever amount it sees fit. Or, the company can choose not to pay dividends at all. The absence of dividends would be indicated by an ellipsis (...), as noted next to AT&T Wrls in the example.