Dividend yield

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In this post hablaremos de dividends that focus fundamentally on the calculation of the dividend yield. Commonly, companies that have a high dividend yield, They present greater purchase possibilities compared to companies that have a lower index, this is because investors regularly value that a safe profit is distributed to them and that it is above what the share is valued in the market.

To begin, we will make a brief summary of the definition of dividends, and it is known as the individual right that corresponds to each of the partners to receive an economic benefit, periodically, from the profits obtained from the company.

The dividend yield or the yield on each dividend., It is a financial ratio in which, through percentages, an existing link is represented between the dividends that a certain company pays to its shareholders in a period of time, which is usually the last year, and the participation can also be calculate with the estimate of the profitability for the following year, but this can give rise to various distortions of the ratio, this is due to the lack of certainty regarding the distribution of these.

For this reason, dividends are a fundamental part of the company's profits and during a certain period of time they are delivered to shareholders an amount proportional to the amount of shares they own.

When a company achieves profit, there is a General Assembly that decides if this money is reinvested in the same company or if it is paid to the shareholders in the way that dividends. Companies with more stability tend to select breakeven points in which a part is invested and the rest is paid in dividends. On the other hand, growing companies do not usually pay out dividends, this is because they reinvest the profits to be able to sustain their own growth and at the same time have the ability to offer shareholders a much higher price for the shares.

Payment methods

Dividends must be paid and this option can be done in two ways, which are as follows:

• In shares: for each share that the shareholder owns, he must receive a certain number of shares. This payment dynamics is also commonly known as capitalization of results, this is because it increases the social capital that the company has.
• Cash: for each share held, a certain amount of money will be received, which will be previously agreed upon by the management of the company in question. This payment dynamic involves many factors, one of which is that the company's assets are reduced.

On the other hand, you can pay a dividend to a future profit account, but this is only feasible if there is sufficient liquidity to do so.

It is important to note that, due to the above, only the ordinary dividend should be paid attention (leaving aside the wonderful one) since, from this dynamic, the company is valued better.

As we already mentioned, dividend yield It is one of the financial ratios most used by shareholders for the valuation of a share. It is necessary to consider the profitability that an investor who acquires a share expects so that he can proceed to the revaluation of the same, as well as the dividends he has received. Also related to this issue is the existence of the payment index, which reflects the percentage of the profit in the company that is distributed as a dividend.

The companies that are in charge of distributing dividends normally, usually have some specific characteristics, otherwise, additional capital would be necessary to finance their expansion at the expense of the shareholders.

By way of explanation, in this post we can know a small introduction of what they are dividends, as well as its alternatives for payment. at the same time, the profitability problem making a parenthesis in the characteristics of the companies that are in charge of distributing the dividends in the pay out ratio, which is also very useful to be able to choose in which company it is in which shares should be bought.

People say that Dividend shares are the main attraction of the Spanish Stock Exchange. It is not known for sure if it is the oldest, but it sure is one of the largest. At least that has ensured the stock market reports in Spain. But surely you wonder, if the country's market has to show off, and the solution is that apparently yes. During the last 10 years, the Spanish Stock Exchange has been the leader in dividend yield, compared to the rest of the stock exchanges in the developed world. It has only been highlighted in the first two months of the year that the country's listed companies have already distributed around 3,500 million euros in dividends to shareholders. Which sounds pretty good.

But, if the question is whether wallets work better with companies with high dividend yield, the solution might seem quite obvious if you look at the reinvestment of dividends distributed by companies and why this index considers the reinvestment of dividends distributed by companies. But this distinction is necessary for the next reason; When a company pays dividends, prices drop and the index crawls, so if we take into account the impact of dividends, we could say that the aforementioned index will make a much closer representation of the behavior of the stock market.

The powerful effect of dividends on the returns of a long-term investment it's amazing. Well this is because a good dividend load was promised in 2017 and so it is today. For this reason, we will list some of the companies that have paid shareholders the most this year.

Power grid

It is Electric company, no se ha quedado atrás, dado que ofrece una rentabilidad por dividendo de aproximadamente un 5,03%, así como un beneficio por acción de 1,24. Con este potencial de revalorización, que supera el 8% y un precio target de 19,50 euros, las acciones de esta Red Eléctrica disponen una recomendación a mantener por parte de múltiples analistas consultados. Desde el punto de vista técnico, estos expertos han llegado a varias conclusiones y una de ellas es que hace falta superar la resistencia de los 19,93 euros para sesgar al alza los plazos intermedios.

Enagas

This company has a dividend yield of approximately 5,95% and also a profit per share of 1.00 euros this year. The consensus of the analysts has considered that the security is an alternative that must be kept in the portfolio, so that from this dynamics a revaluation potential is known that is above the 10% as well as a target price of 26 euros.

Repsol

The Spanish oil company offers a dividend yield of 5,97% and also a profit per share of 1.35 euros. According to studies carried out by expert analysts, Repsol has a buy recommendation among shareholders and could have a potential revaluation of 6.422%, with a target price of 14,500 euros.

Mediaset

In 2017, the Mediaset company It offers shareholders a dividend yield of 5,32% and has an earnings per share of approximately 0.61 euros. the aforementioned company has a system that may be subject to revaluation. Well, the share could even achieve a potential revaluation of 12,15% as well as a target price of 12 euros.

Endesa

The Endesa company is one of the companies that has managed to offer a higher return to its shareholders within the ibex35. Its dividend yield is 6,56% in this 2017 and it also has a profit per share of 1,26%, so the consensus of the analysts consulted is that the company be given a recommendation to keep in the portfolio and a target price of 20.25 euros, it is assumed that this is reflected in a feasible revaluation of 0.596%