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The Dividend Investor: A practical guide to building a share portfolio designed to maximise income by Rodney Hobson

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Chapter 9. Dividend Yield

A problem of comparing dividends

Let us take two very different companies, one making chemicals and the other food, and consider the total dividend that each paid per share in 2010-11:

  1. Johnson Matthey paid 46p
  2. Dairy Crest paid 19.7p
  3. Which company would you prefer to buy?

The answer is that you cannot say. You would need to see a lot more information on the two companies, but we do have a starting point, and that is to find their respective yields, which will give us a direct comparison.

We start by finding the share prices of the two companies, taking 28 October 2011 as the date we were thinking of buying the shares:

  • Johnson Matthey’s share price was £19.27, which looks quite a high price to pay for ...

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