Property’s Yield and a Pricing Model

As concluded in Part I, an investment’s yield serves both as a unit of comparison and as an aid to understanding price. The dividend yield, for instance, is widely used to compare the stock market’s rating of shares, and a share’s yield determines the multiple by which its price exceeds the current dividend. That multiple is the reciprocal of the required dividend yield. So if investors’ required yield is 5%, the share’s price must be 20 times the current dividend.