High dividend yields can signal undervalued stocks from "summary" of The Little Book of Big Dividends by Charles B. Carlson
One of the key concepts to keep in mind when it comes to investing in stocks is the relationship between dividend yields and stock valuation. In simple terms, a high dividend yield can often indicate that a stock is undervalued in the market. When a company pays out a high dividend relative to its stock price, it may suggest that the market has not fully recognized the true value of the company. This can be a signal that the stock is trading at a discount compared to its intrinsic worth. Investors who are able to identify these undervalued stocks have the potential to benefit from capital appreciation as the market eventually corrects itself and the stock price ...
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