Senti-Meter

DEFINITION of 'Senti-Meter'

A market indicator that represents the inverse of a stock's dividend yield, or the ratio of a stock's price to its dividends. It is calculated as:


Price Per Share/Annual Dividends Per Share


A high senti-meter rating indicates positive sentiment toward a stock, since the price of a share exceeds the stock's dividends. It is also a signal that a stock could be overbought. On the other hand, a low rating could signal an oversold stock that investors are generally bearish about.

BREAKING DOWN 'Senti-Meter'

The senti-meter was popularized Edson Gould, who felt that dividend yield was a good measure of how traders viewed a stock and wanted to show how much an investor was willing to pay for a dollar of dividends. The senti-meter can be applied to the market as a whole by dividing an index, such as the Dow Jones Industrial Average, by the average aggregate annual dividends for the companies in the index.

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