A cursory search with the title of the question would most likely point a person towards looking at Div. yield or P/E ratio. The closest I term I can find to what I describe is Div. per share (DPS).
So say I'm looking to invest in identical companies, foo corp and bar corp who pay quarterly dividends. Let's say they both pay a dividend of 1$/share, but foo corp trades at 10$/share and bar corp trades at 100$/share.
My though process at this point is that given individual stock price, I would buy foo corp b/c I can buy more shares of it, thus optimizing the amount of money I make. Now if were to ignore all other factors of investing in a stock and wanted a quantitative value for measuring the "payout efficiency" it would end up being:
Share Price/Declared or Latest Dividend = Payout Efficiency
So I suppose the real questions are:
- Would this be an acceptable method for finding a stock with the highest possible payout?
- Is my underlying assumption that the per share price effects the payout incorrect?
Seeing as my "new formula" is a rather simple solution for the problem, but is not implemented would lead me to believe that I have some incorrect assumption about dividends.