What Is a Dividend Yield Ratio?
Dividend yield is the ratio of dividend per share to share price. Shows the dividends that investors can get per unit of stock investment. It is a component of the return on investment of shareholders, and together with the rate of return on capital constitutes the total return on investment of shareholders. Dividend yield is usually related to a high dividend payout ratio, indicating that the company has a low growth rate, so the capital gain rate is low, and most of the investment needs to be recovered through dividends. [1]
Dividend yield
- Dividend Yield = D / P 0 * 100%
- In the formula:
- Ddividend; P 0 purchase price of stock.