Earnings Yield Explained: Why 5% Isn’t a Cash Payout
Summary
Hollow Point Trading shares an explanation of why a 5% earnings yield is not the same as receiving a 5% cash payment. Using a hypothetical stock priced at $100 with $5 in trailing diluted earnings per share, the announcement connects earnings yield to a P/E ratio of 20 and clarifies an important distinction for investors.
https://youtu.be/l0TZyrydv8c
A five percent earnings yield is not a cash payment #EarningsYield ...
A five percent earnings yield does not promise a five percent cash payment. Consider a hypothetical company priced at one hundred dollars per share, with five dollars of diluted earnings per share over the trailing twelve months. Its price to earnings ratio is twenty. Earnings divided by price gives five percent. Suppose the company distributes ...
