Investment School: What is Dividend Yield?

What is Dividend Yield?

Continuing on the series of explanation of technical parameters of stock analysis, let us now get to know about one another important ratio known as "Dividend Yield".

Dividend yield of a company indicates the annual dividend paid by the company relative to its share price.

Dividend Yield % = (Annual Dividend Per Share / Price per share)*100

If a company A pays dividen of rs 10 and its stock price is 100 rs, then dividen yield is (10/100)*100 = 10%

Dividend yield indicates how much cash flow is generated for each rupee invested in the company by the investor.Dividend yield mutual funds are category which invests in stocks which has higher dividend yields.In general FMCG stocks have a higher dividend yield.

Who can invest in dividend yield stocks?

It is suitable for investors who wanted minimum cash payouts on a regular basis from their investment.

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