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Glossaries

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TermDefinition
Discount rate

An imaginary interest rate, most often equal to the long-term historical return of the stock market, which is used to calculate how much a dollar amount in the future is worth in today's money. This is the minimum return you would have to earn to justify stock picking over investing in an index fund.

Dividend payout ratio

The percentage of net income which is paid out to shareholders in the form of dividends, instead of being reinvested into the company.

Dividend yield

 

The return you earn from dividends paid out by a company. This percentage is calculated as follows:
 
Dividend yield = Annual dividend per share / Current share price