EPS Yield vs Dividend Yield
Two “yields” get quoted for stocks and they measure very different things. Confusing them leads to bad comparisons between income stocks and growth stocks.
EPS yield
EPS yield is simply the inverse of the P/E ratio: earnings per share divided by price. A P/E of 20 is an EPS yield of 5%. It represents the company's total earnings generated per dollar you invest — whether or not those earnings are paid out — and lets you compare a stock's earnings power to a bond yield.
Dividend yield
Dividend yield is the cash dividend per share divided by price. It counts only the portion of earnings the company chooses to distribute. A fast-growing company may have a high EPS yield but pay little or no dividend because it reinvests for growth.
Using them together
For income, dividend yield matters most — but check it's covered by earnings and cash flow. For total return, EPS yield is the better lens: a low or zero dividend isn't a problem if retained earnings are compounding at a high rate inside the business.