Why Dividend Investors Should Know About High Yield

SO OFTEN IN investing, the numbers come out in the wash solely based on how you scrub them.

For a decisive lesson in this truism, look no further than your friendly neighborhood school board election. You know the drill: Incumbent A cites a modest 2-cent tax increase while Challenger B fires back that since taxes were 2 cents to begin with, the esteemed opponent voted for a 100% tax hike.

A similar sort of numerical confusion routinely applies to dividendyield, the percentage calculated by dividing a public company's quarterly payout versus the price of the stock. In general terms, a yield of 4% to 6% is considered healthy, and if that suddenly jumps a few percentage points, you should be overjoyed, right?

Think about this before you bust out the Dom Perignon.