Real Dividend Yield Chart

A investigative tool on ShinyApp for dividend investor

Real Dividend Investor
Data Scientist

Introduction

This app tracks the real dividend yield in percentage of stock A. In financial reports, the annual dividend yield is expressed as the dividend per current share price (for the year in our case).

However, when investors buy a stock, the entry price was not the current price that the financial report uses and thus the dividend yield does not reflect the real dividend of the investor. It has to be noted that actual real dividends may not be increasing even though the reported published dividend yield was increasing over a period of 3 years.

This chart aims to show investors his/her real dividend yield based on the entry price which the investors buy the stock. Note that the stock price fluctuated between $1 - $5 and thus the input value could be in this range.

Parameters Used

The chart was based on the following share price for stock A

Year 1 = $2.50, dividend was $0.10 per share
Year 2 = $3.00, dividend was $0.15 per share
Year 3 = $2.50, dividend was $0.20 per share

Investors input their entry price (purchase price of stock A) and based on the dividend pay out rate, a chart will be plotted to show the actual dividend yield and how it compares against published numbers.

Calculations

For example, if the entry price was $4, $3 and $4 respectively for year 1, 2 and 3 that the investor inputs into the ShinyApp.

    id1 <- (0.1/4)*100
    id2 <- (0.15/3)*100
    id3 <- (0.2/4)*100
    Real <- c(id1, id2, id3)
    Real

## [1] 2.5 5.0 5.0

Charting

The app will take the input and calculate the yield in percentage based on the formula and plot the graph to show real and published yield. In our example, even though the reported dividend yield was increasing, the real dividend was lower because of the entry price. plot of chunk unnamed-chunk-2

Conclusion

It can be shown that depending on the entry price, the real dividend yield could be lower than the published numbers. Thus investor is advised to exercise due diligence when purchasing stock that has high dividend yield. This investigative tool on ShinyApp for dividend investor can be used for assessment.

More parameters will be added in future upgrades.

Thank you.