What Is Dividend Yield?
Dividend yield measures how much a company pays in dividends relative to its stock price. It's a key metric for income-focused investors.
Dividend Yield Formula
Dividend Yield = (Annual Dividend Per Share / Current Stock Price) × 100. For example, if a stock pays ₹10 dividend and trades at ₹200, yield = 10/200 × 100 = 5%.
What Is a Good Dividend Yield?
2-4% is typical for stable large-cap stocks. Above 5% may indicate either a generous payer or a falling stock price. Very high yields (8%+) can be a red flag — the price may have crashed.
Dividend Investing Strategy
Dividend investing focuses on stocks that pay regular, growing dividends. Reinvesting dividends compounds returns significantly over time. Combined with growth, total returns can be substantial.