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Investors will look at a company's dividend yield to see whether or not they should invest in the company. The dividend yield shows how much an investor will receive in dividends compared to how much the stock costs. Only the business can change its dividend yield. A company may want to change its dividend yield to make its stock look like a more attractive investment for investors. This in turn should raise capital for the company.
Determine the current dividend yield by dividing the dividends per share by the price per share of the stock. For example, Firm A paid $1 in dividends per share in 2009. The price of Firm A's stock was $10 a share. Therefore, $1 divided by $10 equals a dividend yield of 10 percent.
Determine the desired dividend yield for your company. In the example, the owners of Firm A decide they want their dividend yield in 2010 to be around 15 percent.
Change the amount of dividends your company pays to adjust dividend yield. In the example, if Firm A's stock is still at $10 a share, then Firm A should adjust its dividends paid per share to $1.50 to meet its desired 15 percent dividend yield.
- Investopedia: Dividend Yield
- Qualcomm. "Dividends for QUALCOMM Incorporated (QCOM)." Accessed August 18, 2020.
- Nasdaq. "Qualcomm Incorporated Common Stock." Accessed July 30, 2020.
- Square. "Form S-1 Registration Statement," Page 55. Accessed July 30, 2020.
- Internal Revenue Service. "Topic No. 404 Dividends." Accessed July 30, 2020.
- Internal Revenue Service. "Instructions for Form 1120-RIC," Page 2. Accessed July 30, 2020.
- U.S. Securities and Exchange Commission. "Investor Bulletin: Real Estate Investment Trusts," Page 1. Accessed July 30, 2020.
- Internal Revenue Service. "Instructions for Form 1099-DIV," Pages 1-2. Accessed July 30, 2020.
- U.S. Securities and Exchange Commission. "Investor Bulletin: Real Estate Investment Trusts," Page 4. Accessed July 29, 2020.
- Hartford Funds. "The Power of Dividends: Past, Present, and Future," Page 1. Accessed July 30, 2020.
- Nasdaq. "GE Dividend History." Accessed August 18, 2020.
Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.