Dividend Yield
The annual dividend per share expressed as a percentage of the share price.
Formula
Dividend Yield = Annual Dividend per Share / Market Price per Share x 100
Unit
%
In depth
Yield rises when the price falls, which means the highest yields in any screen frequently belong to companies whose prices have collapsed and whose dividends are about to be cut — the dividend trap. Trailing yield uses dividends already paid and can include one-off specials; forward yield uses expected dividends and is a forecast. Dividend yield is only part of total return, the rest being price change, so a 6% yield on a stock falling 15% a year is not income. It must also be judged against sustainability, which means comparing the dividend with free cash flow rather than with reported profit.
Worked example
A ₹1.20 dividend on a ₹60 share yields 2%. If the price halves to ₹30 on bad news, the trailing yield shows 4% — a more attractive screen for a company that has just become riskier.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Dividend Yield” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.