Of course, owning a share isn't just about its price.

It's also about what you get back from it.

That brings us to dividends and dividend yield.

Dividends are payments made by a company to its shareholders, usually in cash, but sometimes in the form of additional shares.

They represent a way for companies to distribute part of their profits back to investors as a reward for holding the stock.

The company's board of directors decide to declare a dividend and how much to pay.

Note that in some jurisdictions, shareholder approval is also required, but in most markets, this is purely a board decision For investors, dividends are a tangible signal of the financial health of the company and of management confidence.

Regular and sustainable dividends often suggests that a company is generating steady cash flows and doesn't need to retain all of its profits for reinvestments.

Conversely, when a dividend is cut or suspended, that can be an early warning sign.

The earnings or cash generation are under pressure.

The dividend yield helps investors compare the level of income they can expect from one stock versus another or versus other asset classes entirely, such as bonds or savings accounts.

It's calculated by dividing the annual dividend by the current share price and can be measured on a trailing basis.

That is looking at the total paid over the last 12 months or on a forward basis using the dividends expected over the next 12 months.

Based on analysts, forecasts or company guidance.

High dividend yields can be attractive, especially to income focused investors, but they need to be interpreted carefully.

Sometimes a yield looks high simply because the share price has fallen sharply, which might signal risk rather than opportunity.

That's why investors often look at dividend payout ratios, which is the dividend divided by earnings and cashflow coverage to assess whether the dividend is sustainable.

A simple way to measure cash flow coverage is to divide operating cash flow by total dividends paid.

A ratio above one suggests the company comfortably funds its dividends from its operations.

A ratio below one could indicate the payout isn't sustainable.

From a tax efficiency standpoint, share buybacks can sometimes be, be a more attractive way of returning capital to shareholders than cash dividends, particularly in countries where capital gains tax rates are lower than income tax rates.

Buybacks also offer flexibility, allowing management to return excess cash when appropriate without committing to ongoing dividend payments, which may prove to harder to cut later.