Red herring - Yield that counts

Red herring - distracting attention from an issue by introducing an irrelevant issue or one that is only superficially related to the one being discussed.

I am not sure that is the right fallacy to be using here, but I am sure a fallacy is carried out when investors focus on dividend yields or buyback yield and neglect the true yield (Earnings or FCF Yield).

The equivalent canard in done in the return area when investors focus on dividend yield or buyback yield when they should be looking at total return (capital appreciation + income).

The yield (equity) investors should be concerned with is the earnings yield (not the dividend yield and/or the buyback yield).

With investors searching for, and in many cases chasing yield, they are often focused on the wrong thing.

Earnings yield translates into ROE.

Keep that in mind the next time someone wants to talk about dividends and yields. Yield chasers are making an error of false alternatives by neglecting to focus on total yield (aka Earnings Yield).