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Definition: Dividend yield is the financial ratio that measures the quantum of cash dividends paid out to shareholders relative to the market value per share. It is computed by dividing the dividend per share by the market price per share and multiplying the result by 100. A company with a high dividend yield pays a substantial share of its profits in the form of dividends. Dividend yield of a company is always compared with the average of the industry to which the company belongs.
Description: Companies distribute a portion of their profits as dividends, while retaining the remaining portion to reinvest in the business. Dividends are paid out to the shareholders of a company. Dividend yield measures the quantum of earnings by way of total dividends that investors make by investing in that company. It is normally expressed as a percentage. The formula for computing the dividend yield is Dividend Yield = Cash Dividend per share / Market Price per share * 100.
Suppose a company with a stock price of Rs 100 declares a dividend of Rs 10 per share. In that case, the dividend yield of the stock will be 10/100*100 = 10%. High dividend yield stocks are good investment options during volatile times, as these companies offer good payoff options. They are suitable for risk-averse investors. The caveat is, investors need to check the valuation as well as the dividend-paying track record of the company. Companies with high dividend yield normally do not keep a substantial portion of profits as retained earnings. Their stocks are called income stocks. This is in contrast to growth stocks, where the companies retain a major portion of the profit in the form of retained earnings and invest that to grow the business. Dividends in the hands of investors are tax-free and, hence, investing in high dividend yield stocks creates an efficient tax-saving asset. Investors also take recourse to dividend stripping for tax saving. In this process, investors buy stocks just before dividend is declared and sell them after the payout. By doing so, they earn tax-free dividends. Normally, the share price gets reduced after the dividend is paid out. By selling the share after the dividend payout, investors incur capital loss and then set off that against capital gains.
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Investing in PSU stocks? 5 stocks with decent dividend yield especially when valuations have inched upWhen it came to investing on the basis of high dividend yield, it was the PSU stocks which topped the list. But then came the rally in the PSU space and it was not about dividend yield but capital gains. But the fact is that dividend yield is a cushion which will act as cushion as investors chase capital gains. A stock which is currently available at dividend yield close to 5 percent, is not bad for an investor who is keen to have some margin of safety at a time when valuations are extremely high. The reason is, when a correction takes place and the dividend yield of these particular stocks goes above 7 % there is a high probability that there would be some institutional investors who would pick it up again for dividend yield more than anything else.- Analysts mostly retain share price targets on TechMThe average analyst price target on Tech Mahindra by Bloomberg after the third quarter results was at ₹1,302, implying a downside of 1.67% from Thursday's closing. Analysts said that the company's weaker performance indicates that turnaround would be tough in the near term, given the weak demand environment.
- About two-third of the overall REITable stock in India falls in secondary business districtsAmongst these SBDs, the SBD of Hyderabad holds the highest quantum of REIT-worthy stock with 28% share, followed by Bengaluru at 24% Additionally, over 60% of the Grade A stock within SBDs is REIT-worth, mentioned Colliers.
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