HOW TO CALCULATE DIVIDEND YIELD: A KEY METRIC FOR INCOME INVESTORS
The Dividend Yield Ratio shows the annual dividend income relative to a stock's market price. Formula: Dividend Yield = Annual Dividend per Share/Market Price per Share x 100. It helps assess income potential.
Income Focused Investors: A higher yield suggests a good income source | Risk Indicator: A very high yield may signal a risky or overvalued stock | Comparison Tool: It allows investors to compare returns across different assets.
For a stock paying Rs 5 per share annually with a price of Rs 100, the dividend yield would be 5%.
Steady Dividends: Consistent or growing dividends often indicate financial stability | High Yield Caution: A very high dividend yield could point to a struggling company trying to attract investors.
The dividend yield ratio is essential for income-focused investors | Consider the Bigger Picture: Always assess a company's financial health and growth prospects along with the yield when investing.