This slideshow covers the three most important dividend metrics.

1. DIVIDEND STOCKS
P&G VS. Waste Management

2. Dividend Yield: The dividend yield is a ratio that divides a company’s
annual dividend per share by its share price. For example, Procter &
Gamble’s annual dividend per share is $2.65 and its shares cost $76
each. Thus, its dividend yield is 3.5%. From the perspective of income-
seeking investors, a higher yield is generally better than a lower yield.
P&G takes the nod when it comes to
dividend yield. Its shares yield 3.5% vs.
Waste Management’s 2.8%.
3.5%
2.8%
0.0%
1.0%
2.0%
3.0%
4.0%
Procter & Gamble Waste Management

3. Dividend Growth: While the current dividend yield is important, it says
little about what investors can expect from a dividend stock in the
future. To get a sense for this, you look at the growth rate of a
company’s dividend. In the chart below, for instance, we look at the
change in these companies’ dividends (ttm) over the past decade.
P&G comes out on top, with a 10-year
dividend growth rate of 140% vs. Waste
Management’s 91%.
$0.00
$1.00
$2.00
$3.00
201520132011200920072005
Procter & Gamble Waste Management

4. Dividend Payout Ratio: The dividend payout ratio measures the
percentage of a company’s net income that’s distributed each year to
shareholders via dividends. There’s nothing wrong with a high payout
ratio, but it does limit future dividend growth. For our purposes, then, a
lower ratio is preferable to a higher ratio.
Waste Management prevails here, with a
dividend payout ratio of 65.6% compared
to P&G’s 87.3%.
65.6%
Waste Management
87.3%
Procter & Gamble

5. Tallying the score: When all three of these dividend
metrics are considered together, Procter & Gamble
prevails as the clear winner, earning top honors to two
out of the three categories.
This analysis shouldn’t be interpreted as the final
word on either of these stocks, but rather as a
starting point for further analysis.
Dividend Yield
Waste Management
Procter & Gamble
Dividend Growth Procter & Gamble
Dividend Payout Ratio
Metric Best Stock

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