Time to buy? The FTSE 100 in four key graphs

The yield on blue-chip shares has been as low as 2pc and as high as 5.5pc since 1999. Our graphs show the key trends

DYI Comment:  The U.K. FTSE 100 dividend yield is almost 100% greater than the U.S. market pushing out their 10 year annualized estimated return close to 9%.  This compares to a scant 2% estimated annualized return here at home.  Of course there is the other variable of currency exchange between the Pound and Dollar changing your return depending on the strength of the U.S. currency.

He added: "The dividend yield tells you a bit more. The yield will tend to be high when prices are low and vice versa. The measure is often used in conjunction with the yield on government bonds or gilts to assess the relative attractiveness of bonds and shares. 

"Before 'QE' it was natural to expect shares to yield less than gilts because they also carry the potential for dividend growth and capital growth over the long term. Not so any more – UK shares yield around 3.5pc and the 10-year gilt just 2.2pc, thanks to the Bank of England. The drawback of looking at the dividend yield is that it is backward-looking in that it involves last year’s dividends."

"The Cape is like the p/e except that, rather than looking at last year’s earnings, it looks at the last 10 years of earnings," Mr Khalaf said. "The idea is that you are levelling out the ups and downs that company profits experience by looking at 10 years of data. On this measure the UK market is pretty cheap by historical standards."

DYI