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Is there a way to quantify the potential cheapness (or overvaluedness) of a stock's price when comparing current and average dividend yield from a dividend yield theory (DYT) perspective?

For example if I can say that stock XYZ's DY of 2.88% is 153% greater (taking percent difference) than its 10-year average DY of 0.38%, then under DYT can I only then say that "the stock may be undervalued by some amount" or is there a way to attach a number relating to the actual price of where the stock "should" be (so can say that by DYT, XYZ is X% undervalued)?

  • The problem is that it isn't at all clear that quantifying this gives you any actionable signals for buys or sells. The way to answer this is to get access to a strategy back tester and run it since WWII to see if it is useful. – zeta-band Mar 29 at 18:40

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