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Ask a money expert: how do I find a stock's dividend yield and valuation?

James Connington
Research skills are a key part of investing in shares as an individual  - AFP

I want to start buying shares and need to find data on the companies I'm interested in. How do I find some of the most common metrics, such as price-to-earnings ratio and dividend yield?

SD, Exeter

There are a number of free online options available to carry out the required fact-finding. These include morningstar.co.uk and the websites of Hargreaves Lansdown or various other investment shops.

Be wary of relying heavily on one source - often, different services produce different figures for the same metric, depending on exact definitions used.

To find a dividend yield, search for a company's name and it should be visible on the first page. Typically, the yield will be based on the current share price and the most recent full year's dividend, although "prospective" figures, based on expected payouts, are sometimes available.

To find dividend figures in pence for recent years, you may need to click through to a more detailed page of data - look for "dividends per share" or "DPS".

You can use this pence figure to calculate the yield for yourself, if you wish. Divide 100 by the current share price in pence, then multiply the resulting figure by the dividend amount in pence.

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The websites can also provide information on turnover, profits before and after tax, operating costs, assets, debts, cashflow and more.

The most common valuation metric, other than dividend yield, used when looking at a stock is its price to earnings or p/e ratio.

Again, this should be displayed on the first page of any firm's profile. As with yield, it will normally be a backward-looking measure, based on the current share price and earnings in the past 12 months.

There may be significant differences between figures on different services, depending on what has been counted as earnings.

To calculate it yourself, first find a company's earnings per share in the detailed financials page. Or divide its post-tax profits by the total number of issued shares to work out its earnings per share.

Then divide the company's share price by the earnings per-share figure.

For instance, consider a company that has one million shares outstanding and post-tax-profits over the past year of £1m. Its earnings-per-share figure is £1. If it has a share price of £10, then its price to earnings ratio is 10.