Question: What is the difference between required rate of return and dividend yield?
In one of the books in finance I have read "the industry average dividend payout ratio is 15-25%. those firms offered their equity holders a total return of 20-22%" Does the word "return" used mean required return or dividend yield?
Answer:
Total return is the gain in price plus dividends. Pay out ratio is the percentage of their earnings the company paid out in dividends. Dividend yield is the percentage of the current price to dividend paid in the last 12 months.