Finweek Editor Marc Ashton responds:
The first point is that many asset managers just glibly quote any number, and it is a good lesson to investors that they should do some further investigating. It also depends on when the manager was interviewed, as this may have some impact on the actual quoted yield if the share price has moved sharply.
However, the more technical answer revolves around how the yield is calculated and whether they are referring to an historic dividend, a forward dividend yield or a consensus yield.
The historic dividend yield takes the full-year final dividend and divides it by the share price. Sasol paid a full-year dividend of R19/share. If the Sasol share price is R485, then your dividend yield is 3.9%.
The problem with historic dividend yield is that in the case of African Bank Investments Limited (Abil) or Telkom, investors may know that the yield is going to slump, especially if the share price has fallen, and this will reflect as a great yield when in fact it is going to fall.
Depending on how the forward dividend yield is calculated, we could say that Sasol is expected to deliver R13.30 (its second-half dividend) for both halves of the new financial year, which means instead of paying R19/share you get R26.60 per share. That gets you a yield of closer to 5.5%.