What is Dividend Yield? How to Find High Dividend Yield Stocks
Dividend yield shows the annual income percentage you earn from holding a stock.
Dividend yield is the annual dividend per share divided by the stock price, expressed as a percentage. It tells you how much income you earn relative to the price you pay. A 5% yield means you receive Rs.5 in dividends for every Rs.100 invested.
If ITC pays Rs.15 annual dividend and the stock trades at Rs.450, dividend yield is 15/450 = 3.3%. You earn 3.3% annually just from dividends, on top of any stock price appreciation. Compare this with bank FD rates to evaluate attractiveness.
Dividend Yield = (Annual Dividend per Share / Stock Price) x 100
If annual dividend is Rs.20 and stock price Rs.400: Dividend Yield = (20 / 400) x 100 = 5%
What is a good dividend yield?
Above 3% is considered attractive. Above 5% is high yield. Below 1% means the company retains most profits for growth. NIFTY 50 average yield is around 1.2 to 1.5%. High-growth companies typically have low yields because they reinvest profits.
Can high yield be a trap?
Yes. If the stock price has fallen sharply, yield increases mathematically. A stock falling from Rs.500 to Rs.200 with Rs.20 dividend shows 10% yield, but the price decline signals trouble. Always check if the business can sustain dividends.
Screen for high dividend yield stocks on Stockk Equity with historical yield data. Explore dividend-focused ETFs at Stockk ETF.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice. INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410. For any complaints pertaining to securities broking please write to [email protected], for DP related to [email protected].
Frequently Asked Questions
How does yield change?
When stock price rises and dividend stays same, yield falls. When price falls, yield rises. When dividend increases with stable price, yield improves. Track both components.
Is dividend yield better than FD returns?
Dividend yield plus capital appreciation can exceed FD returns. But dividends are not guaranteed and stocks carry market risk. Use StockkAsk at stockk.trade/stockkask for yield comparison.
Which sectors offer highest yields?
PSU companies (Coal India, Power Grid, ONGC), utilities, and mature FMCG companies. IT companies have improved yields recently.
Does yield work for growth stocks?
Growth companies reinvest profits, resulting in low yields. Amazon, for example, pays zero dividend. Growth investors sacrifice current income for future capital appreciation.
How to build a dividend income portfolio?
Select 10 to 15 stocks with consistent dividend history, yields above 3%, and stable or growing payout. Diversify across sectors. Reinvest dividends for compounding until you need the income.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410
