Better Dividend Stock

Best Buy

GameStopvs.

Dividend Yield: This is the ratio of a company’s annual dividend per share to its share price. A high yield (2%-5%) is better than a low yield, though one that’s too high (5% or more) should be viewed skeptically, as yield and risk are positively correlated.

4.44%

3.75%

0%

1%

2%

3%

4%

5%

Best Buy GameStop

Div

ide

nd

Yie

ld

Best Buy

Dividend Growth: Ideally, investors want to buy into growing streams of dividends. A popular way to predict if a company will oblige is to look at its dividend history -- specifically, how much and how often it has boosted its payout in the past.

$0.00

$0.50

$1.00

$1.50

$2.00

Current20132011200920072005

An

nu

al D

ivid

en

d Best Buy GameStop

Best Buy

Dividend Payout Ratio: This shows how much of a company’s net income it pays out via dividends. A high payout ratio isn’t bad per se, but it does limit dividend growth. Thus, for our purposes, a lower ratio is preferable to a higher ratio.

52%

Best Buy

38%

GameStop

GameStop

Tallying the score: When all three of these dividend metrics are considered together, the winner is:

This analysis shouldn’t be interpreted as the

final word on either of these stocks, but rather

as a starting point for further analysis.

Dividend Yield

Dividend Growth

Dividend Payout Ratio

Metric Best Stock

Best Buy

Best Buy

GameStop

Best Buy

Looking for more information like this? The Motley Fool’s mission is to help the world invest better. We’ve done this over

the past 20 years by thinking long term and outside the box – even if that means turning Wall Street on its head. To learn more about what The Motley Fool thinks about current investment trends, and receive a special free report about what might be the next big industry to come out of Silicon Valley, just click here now.