Formula is used when considering whether to invest in a profitable company that pays out dividends versus a profitable company that has high growth potential.
The formula for the dividend yield is used to calculate the percentage return on a stock based solely on dividends.
The formula for dividends per share, or DPS, is the annual dividends paid divided by the number of shares outstanding.
Gordon Model is used to determine the current price of a security. The Gordon model assumes that the current price of a security will be affected by the dividends, the growth rate of the dividends, and the required rate of return by shareholders. Use the Gordon Model Calculator below to solve the formula.