Hello everyone! I’m trying to learn my way through dividents and I’m not used to reading technical books even though the book I’m reading is a starter it’s a feeling out process for me. The way the book defines these terms are a little confusing for me and I would just like them to be defined in simpler wording.
Current Dividends per share
earnings per share
price to earnings ratio
return on equity
debt covering ratio
thank you so much!
Dividends are payments made by companies to shareholders from profits or cash reserves. They are typically paid quarterly to shareholders of record on a particular date.
The dividend yield is the percent of share price that annual dividends equal. So if a company pays 25 cents/quarter and their share price is $50, then it’d have a 2% yield (4 x 25c = $1/$50).
Earnings per share is the ratio of a company’s earnings per share divided by share price. $5 annual earnings / $100 share price is P/E of 20. Most companies are around 15-20, with slow growth or declining companies lower and high growth ones higher.