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Author: Packers101 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3874  
Subject: Re: Groupon Inc Date: 9/1/2012 10:40 PM
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The dividend yield, in my opinion is pegged to what the payout, be it current or past going back as far as YOUR purchase date, is. To put it another way, if YOU paid $10 for a stock and that stock was paying a $1 annual dividend at the time of YOUR purchase, the you would be receiving a 10% payout.

If the stock were to rise to $15 or drop to $5, the dividend yield changes only for new purchases. YOU still have a cost basis of $10, so any payouts will be based on your $10 per share cost. That is YOUR personal rate. If the company raises its payout to $2, you would now be receiving $2 on a $1 investment, and YOUR rate would then climb to 20%. But this is based on a change in the payout amount, not a change in the stock price.

The rate you receive will always be based on the annual dividend amount and the price you paid for the stock.

Rises and falls in the stock price create unrealized (unless and until you sell) gains or losses, not changes in dividend rates once you have bought the stock. If you sell, those gains or losses go from unrealized to realized.

I hope this helps -

Paul
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