{"id":294,"date":"2025-07-06T06:48:45","date_gmt":"2025-07-06T06:48:45","guid":{"rendered":"https:\/\/cardinals.highflags.com\/?p=294"},"modified":"2025-07-06T06:48:47","modified_gmt":"2025-07-06T06:48:47","slug":"what-is-dividend-yield","status":"publish","type":"post","link":"https:\/\/cardinals.highflags.com\/index.php\/2025\/07\/06\/what-is-dividend-yield\/","title":{"rendered":"What is Dividend Yield?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\">\u2705 In Simple Words:<\/h3>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>Dividend Yield tells you how much money a company gives you back (as dividend) for every \u20b9100 invested in its stock.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>It\u2019s like <strong>interest you earn<\/strong> from your shares \u2014 just like earning interest from a bank FD.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83e\uddee Formula:<\/h3>\n\n\n\n<p><strong>Dividend Yield = (Dividend per Share \u00f7 Market Price per Share) \u00d7 100<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83c\udfea Example:<\/h3>\n\n\n\n<p>Let\u2019s say:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A company gives \u20b95 dividend per share in a year.<\/li>\n\n\n\n<li>The current market price of the stock is \u20b9100.<\/li>\n<\/ul>\n\n\n\n<p><strong>Dividend Yield = (\u20b95 \u00f7 \u20b9100) \u00d7 100 = 5%<\/strong><\/p>\n\n\n\n<p>\ud83d\udc49 This means, if you invest \u20b91 lakh in this stock, you earn \u20b95,000 per year as passive income.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\u2705 High Dividend Yield = Good?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Yes<\/strong>, if the company is stable and has <strong>consistent profits<\/strong>.<\/li>\n\n\n\n<li><strong>No<\/strong>, if the share price has fallen due to poor performance (sometimes yield looks high for wrong reasons).<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading has-primary-color has-text-color has-link-color wp-elements-483bf9fc369fe05a65a10fedacee3061\">\ud83d\udcd8 2. <strong>What is Dividend Payout Ratio?<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">\u2705 In Simple Words:<\/h3>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>The dividend payout ratio tells you how much of the company\u2019s profit is being shared with shareholders as dividends.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>The rest is kept by the company for growth, expansion, or reserves.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83e\uddee Formula:<\/h3>\n\n\n\n<p><strong>Dividend Payout Ratio = (Dividend per Share \u00f7 Earnings per Share) \u00d7 100<\/strong><\/p>\n\n\n\n<p>Or<\/p>\n\n\n\n<p><strong>Payout Ratio = (Total Dividend Paid \u00f7 Net Profit) \u00d7 100<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83c\udfea Example:<\/h3>\n\n\n\n<p>Let\u2019s say:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A company earned \u20b910 per share in profit (EPS).<\/li>\n\n\n\n<li>It gave \u20b94 per share as dividend.<\/li>\n<\/ul>\n\n\n\n<p><strong>Dividend Payout Ratio = (\u20b94 \u00f7 \u20b910) \u00d7 100 = 40%<\/strong><\/p>\n\n\n\n<p>\ud83d\udc49 This means the company kept <strong>60%<\/strong> of its profit and gave <strong>40%<\/strong> to shareholders.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\u2705 High Payout vs Low Payout:<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Type<\/th><th>Meaning<\/th><th>Example Type of Companies<\/th><\/tr><\/thead><tbody><tr><td><strong>High Payout<\/strong><\/td><td>Company shares most of its profits, less focus on growth<\/td><td>Mature firms like Hindustan Unilever, Coal India<\/td><\/tr><tr><td><strong>Low Payout<\/strong><\/td><td>Company reinvests profits to grow<\/td><td>Growing firms like Infosys, Tata Elxsi<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83d\udcca Summary Table:<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Term<\/th><th>What It Shows<\/th><th>Good If&#8230;<\/th><\/tr><\/thead><tbody><tr><td><strong>Dividend Yield<\/strong><\/td><td>Return on your investment as cash income<\/td><td>You want passive income<\/td><\/tr><tr><td><strong>Payout Ratio<\/strong><\/td><td>How much of profits are given as dividends<\/td><td>You want steady cash + safety<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83d\udca1 Final Tip:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If you want <strong>regular income<\/strong> \u2192 Look for <strong>high dividend yield + high payout<\/strong>.<\/li>\n\n\n\n<li>If you want <strong>growth in your investment<\/strong> \u2192 Look for <strong>low payout<\/strong>, but <strong>high growth<\/strong> companies.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>\u2705 In Simple Words: Dividend Yield tells you how much money a company gives you back (as dividend) for every \u20b9100 invested in its stock. It\u2019s like interest you earn from your shares \u2014 just like earning interest from a bank FD. \ud83e\uddee Formula: Dividend Yield = (Dividend per Share \u00f7 Market Price per Share)&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-294","post","type-post","status-publish","format-standard","hentry","category-blog"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is Dividend Yield? - cardinals<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cardinals.highflags.com\/index.php\/2025\/07\/06\/what-is-dividend-yield\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is Dividend Yield? - cardinals\" \/>\n<meta property=\"og:description\" content=\"\u2705 In Simple Words: Dividend Yield tells you how much money a company gives you back (as dividend) for every \u20b9100 invested in its stock. 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