What is a Dividend Yield?

In order to determine whether a particular stock is under-priced or over priced you should use dividend yield. The latter is calculated by using the current stock price to divide the dividend. As a result the higher the per share price the lower the dividend yield will be. This shows an inverse relationship between yield and price.

So, if a stock is under priced, then the dividend yield should be high and vice versa - if the dividend yield is low, then the stock is potentially over priced. 

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