When to invest in the stock markets.

One of the most important things that you need to know about stock market investments is how to determine the yield of a stock. Knowing what the yield of a stock is can help you decide whether or not you want to buy that stock.
Essentially, the yield of a stock is the company's dividend when it is expressed as a percentage of the share price. So, you divide the amount of the dividend by the cost of each share of stock. For example, let's say that you buy a share of stock in Corporation Make More Money for $55. The dividend that you receive per year from this corporation is $3. This means that the yield of the stock is 5.4% (three divided by 55).
By looking at the yield of a stock, you can see how the company is doing when you compare it to its competitors. Look at the dividends, first of all. If your company, or the company that you're considering investing in, has a long history of paying rising dividends, this means that the company is strong enough that it can weather difficult times as well as performing well in a good economy. The best company to invest in is one that has a history of both rising earnings per share and rising dividends.

You can find the current dividend and the current yield of a stock in the daily stock listings in your local newspaper. Standard & Poor's Stock Guide and Value Line will give you dividend and yield history, or you can just look online.
Now, a stock's dividend yield is just one type of yield of a stock. There is another yield of a stock, which is the capital growth yield. When you put them together, you have the total yield of a stock. The capital growth yield is the actual increase in the value of the stock, rather than a percentage of the current price of a stock (not the price that you paid initially--don't make this mistake!) and the current dividends. When you are considering the capital growth yield of a stock, you should think about the expected capital growth of the company. To know if you are going to have a great expected total yield, you need to consider both the capital growth yield (the future of the company) and your expected dividend yield.
To really understand your dividend yield, you need to look at it in comparison and in relation to the expected capital growth yield. If your company actually does not pay very high dividends, but chooses instead to reinvest money in development of the company, in exploring other options, in developing research, in purchases, and other things like that, hopefully these reinvestments will increase the value of the company itself. This means that you will actually see an increase in the value of the stock itself, and you will end up with larger dividends in the future, even if the pay off is not quite as immediately high today.
So when shopping for stocks, you should just choose the one with the highest dividend yield, right? Wrong. Just because a dividend yield is higher than the market average does not mean that the company is necessarily doing well. If the company suddenly falls because a product is shown to be defective or they don't end up making as much as they projected, then the stock price will fall and you'll be left with an incredibly low yield. You need to look at other indicators of the company's financial health, and have other financial markers and goals for yourself. However, if you are looking for stocks that have high dividend yields, make sure that you look at the payout ratio of the company. The payout ratio is the percentage of the company's earnings that the company gives to shareholders. You actually don't want the percentage to be too big, because this means that not a lot of money is going back in to the company to help with development. This either means that the company is about to crash and the directors know it, or the company is eventually going to fail because it didn't improve itself enough.