earnings yield

That figure is called the "earnings yield, " and for the S& 500 it currently is less than 5%.

Companies only pay out a fraction of their earnings as dividends, so the earnings yield was then much higher than the government-bond yield.

Chris Watling of Longview Economics points to another measure, the relation between the earnings yield and the real return on cash.

earnings yield, changes in ROE and growth opportunity have significant positive relation with stock return.

When equity prices fall their yield rises. The theory holds that if earnings yield is higher than bond yield then equities are cheap.

Imagine, in a perfect world of smooth returns, you buy a $100 basket of shares today with a 7% earnings yield.

Earnings Yield The earnings per share for the most recent 12 months divided by market price per share.

Over the past 50 years, the earnings yield has averaged around five percentage points higher than the return on cash.

Of course, a high earnings yield is meaningless if earnings fall off a cliff.

European common stocks sell at 12 times current earnings, which translates into an earnings yield of 8. 5.

Flip the ratio around and you have the earnings yield, the percentage of the share price that is represented by profits.

An Empirical Study of Drift of Stock Earnings Yield

The conclusion are (1) credit condition is the factor which works on the earnings yield of OTC financial derivatives;