long term chart, page-118

Rondog

When the dividend yield is 7%, there is demand, because the share price will be undervalued.

When the dividend yield is 5%, there is supply, because the share price will be overvalued.

You said: "If there is over supply of a stock, the share price falls and the dividend, as a percentage of the prevailing stock prices, rises. When the stock price goes up (E.G, there is demand), the dividend, as a percentage of the prevailing stock price, falls."

Although you are saying the same thing, your thinking is backwards.

The oversupply starts occuring when the yield is low & share price is overvalued. As the share price falls, the yield becomes high. Then demand kicks in and moves it back up to the point when it is overvalued again. Then the cycle starts again.

Both over supply and over demand will pass through the same medium point.