Letters of the Week

Calculating yield, dividend streams, and the politics of superannuation.

I do not understand the logic underlying Adam Carr’s analysis of the Commonwealth Bank of Australia yield. If a share is worth $20 today, then that is the relevant figure for calculating yield, not the $10 I may have paid to purchase it some time ago. The opportunity cost of holding the share is $20 and if the dividend is $1 then it is yielding 5%, not 10%. Surely date of purchase and historical cost are quite irrelevant to the exercise (putting aside possible capital gains tax issues).

B Bartley


SMS Code Sent…

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to activate your membership

If you didn't receive SMS code please

Log in to access this content

Looks you are already a member. Please enter your password to proceed

Hi {{ user.FirstName }}

Verify your mobile number to unlock a FREE trial

Looks like you've already taken a free trial

Please sign up for full access

Updating information

Please wait ...

Related Articles