Dividend Yield

Dividend Yield is a financial ratio that indicates how much a company pays out in dividends each year relative to its stock price. It is a measure often used by investors to assess the relative attractiveness of different dividend-paying stocks. This figure is presented in percentage form, and it’s obtained by dividing the annual dividends paid per share by the stock’s current market price per share.

For example, if a company’s annual dividend is ₹2.00 per share and the stock’s price is ₹40.00, the Dividend Yield is 5%. This means that an investor would receive 5% return on their investment from dividends alone, not considering any potential price appreciation.

While a high dividend yield can be very attractive, especially to income-focused investors, it is also important to consider the company’s overall financial health. This is because a company with weak fundamentals may not be able to maintain its dividend payout. Therefore, just like any other investment metric, dividend yield should not be used in isolation.

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