Hey guys, welcome back. Let's go into how to calculate a dividend yield now, all right, because I want you to be able to understand every aspect of this chart, it might look intimidating for you. But honestly, it's not that bad at all. And once you understand it, you can really start putting it into use and making a lot of money with the stock market on a passive basis. Okay? You sometimes find people going crazy over huge complex investments, and trying to learn all the complexities and crazy things in order to get a decent rate of return on their money.

But you'll soon find that it's very easily easy for anyone to be able to have access to good rates of returns and good investments and profit and passive income coming in. All right. Unfortunately, we don't learn these things in school. All right, we don't go over these basics and you're trying you're pretty much thrown into the world on your own to make money. All right, but that's why I like to be able to teach people and show them how they can can be making so much more money with the money that they already have. All right?

There's no real it's a 21st century, it's 2015. We don't need to constantly work anymore, like people 2000 years ago needed to Alright, you have the ability to put your own money to work and create money for you so that you can go on and enjoy your life. All right, but sorry, that's a little tangent. Let's get into the main purpose of this lesson, which is how to calculate and understand dividend yields. Alright, so it's important to understand that the dividend yield is the amount of money that you'll get back or based on your percentage. All right.

So in essence, it is very similar to the rate of return. So let's see how they calculate it. All you do is you take the amount of money that you'll get from the stock on a yearly basis. Okay. So that means at the board meeting, they sat down and they came up with that Number, all the board, all the directors, all the high level executives, they came up with the amount that they're going to pay for every single share that they have, you know that people have in their hands. So this company ticker symbol p er.

All right. That means they trade on the Stock Exchange under that symbol. And their name is SandRidge premium trust, I trust and I'll go over certain industries and certain businesses later on and in the later modules, but you can see that they are going to be giving an annual dividend of $2 and 62 cents, all right, and their current price and this is a database that is updated every day depending on the price of the stock market. That it is at it's $7 and 26. So for you to own a single share of this company, you have to put in $7 and 26 cents. However, by owning this single share You'll be getting back this much money $2 and 62 cents.

So all you do, all right, is take the annual dividend 2.62 and you divide it by the amount of money that you put in seven. Sorry about that 7.26. All right, and you get a dividend yield. All right? So that means that you're essentially making back 36% on your money. That's what the dividend yield is.

All right. Now, before we get ahead of ourselves, let me explain how dividend yields work and let me give you a frame of reference. Alright, because 36% if you're a new investor, you don't know if that's good. That's bad. Is that amazing? Is that ridiculous?

You know, so let me give you some basic information in this lesson about rates of return. Okay. I'm back like a decade ago or two, three decades ago, your savings account used to give you higher percentages like 34567 8% Alright, so generally speaking, the way it works is that the less risky, alright, less risky the investment is, the less return you're going to get. So for example, in today's world, your savings account, which is the amount, you know, in your with your bank probably gives you only like a point two 5% or point 5% annual return. The reason for that is because there's no risk, right? No one actually ever worries that their savings account can disappear.

Right? Because it's insured by the government. banks who have very strict regulations to very safe investment you don't when you put your money into a savings account, you don't have to worry about always, is it going to go up? Is it going to go down? Am I going to lose it? You know, generally speaking, in America, at least, if your bank is fica insured, right, then you don't have to wait too much.

So there's very low risk and you get a very little return. Now an average investor will try like I'm talking About millionaires and billionaires, all right, they'll try to look for returns of about 10%. All right. Now, the reason for that is because 10% is like a business. investment. And again, this is all very general, you know, you could meet someone tomorrow is a millionaire who will be happy with 5% return.

And you'll you can find some a millionaire who will only go into investments with 25% returns, okay? But remember the general rule, which is always a fact, right? The more the higher the return. So the higher the dividend yield, the more risky the investment. Alright, so now let's apply that to stock market. And, for example, as I mentioned before, at&t, very reliable company, a very strong company with very good financials.

No, there's really no investors out there that are going to that will say that at&t is going to go bust any day, okay? They're very strong, very powerful. Have good fun. financials very good cash flow to good running business. They give dividend yields of 5%. Alright, so where if for the rest of this course i'm going to use that as the benchmark so you can gain an understanding of it, because the way that you make money in dividend yield stocks are twofold.

Alright, and so that's what I'm going to go over in the next lesson. So I'll see you guys in the next lesson.