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When investing in the stock market, returns can come from a couple of different sources. One is the increase in value of a share during the period I own it. The other is dividends. Neither is guaranteed, even for a share in the blue-chip FTSE 100 index.
Still, by considering the prospects for those two possible sources of return, I can try to get a handle on what any given share might end up meaning for me financially.
Imagine my quest as an investor was to find the most lucrative share on the FTSE 100. Here is how I might go about it.
High yield – and a growing dividend
Looking at dividends first, my eye would immediately be drawn to the highest-yielding share in the FTSE 100.
Offering a yield of 10%, that share would hopefully pay me £10 in dividends each year for £100 invested now.
That presumes the dividend is maintained, of course. In practice, that may not happen….
