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EPS vs Dividend Yield

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › EPS vs Dividend Yield

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • April 27, 2015 at 12:55 am #242862
    Cristian
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hi

    What is the difference between EPS and Dividend Yield? Both seem to have the same objective

    Thanks

    April 27, 2015 at 7:36 am #242884
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54753
    • ☆☆☆☆☆

    I don’t know what you mean by “the same objective” because they are looking at completely different things.

    EPS is total profit available for shareholders divided by the number of shares.
    On its own it means very little because it takes no account of the market value. However looking from year to year does indicate whether the business is more or less profitable for shareholders.

    Dividend yield is the dividend per share as a percentage of the market value per share.
    It clearly does take into account the market value. However, it only looks at the current dividend and ignores potential future dividend growth.

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