Categories
- Glossary
Suggest a new Definition
Proposed definitions will be considered for inclusion in the Economictimes.com
Equity
- PREV DEFINITION
- NEXT DEFINITION
Earnings per share (EPS)
Read More
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.
Read More News on
- SHAREYIELDSHAREHOLDERDIVIDEND YIELD
- CASH DIVIDEND
- PREV DEFINITION
Dividend
Read More
- NEXT DEFINITION
Earnings per share (EPS)
Read More
Related Definitions
- 52 Week High Low: Prices of commodities, securities and stocks fluctuate frequently, recording highest and lowest figures at different points of time in the market. A figure recorded as the highest/lowest price of the security, bond or stock over the period of past 52 weeks is generally referred to as its 52-week high/ low.Description: It is an important parameter for investors (as they compare the current trAlgorithmt is Algorithm?The term "algorithm" refers to a collection of guidelines to be followed in computations or other problem-solving procedures. This sums up the algorithm definition. It is also a process for handling a mathematical equation in several iterations, sometimes using recursive operations. It is often easy or complex, depending upon the nature of the problem. What are the characteristics oAlgorithm Trading: Algorithm trading is a system of trading which facilitates transaction decision making in the financial markets using advanced mathematical tools.Description: In this type of a system, the need for a human trader's intervention is minimized and thus the decision making is very quick. This enables the system to take advantage of any profit making opportunities arising in the market much beforAlpha: Alpha is an estimated numeric value of a stock's expected excess return that cannot be attributed to the market's volatility, but may be due to some other security.Description: In other words, it is the difference between the investment return and the bench mark return (for e.g. NSE Nifty). It is one out of the five technical risk ratios which help the investor to determine the risk reward p
- American Option: American options are derivatives contract with the option of redeeming the contract during the life of the option.Description: The unique feature of redeeming the contract before maturity or on the date of maturity gives it an added advantage of tradability. Due to this particular feature, it is the most widely traded option on trade exchanges. It is highly liquid in nature.It is to be nArbitrageArbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference (usually small in percentage terms). While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same. Only the price difference is captured as the net pay-off from the trade. The pay-off should be Assetare things you own that you can sell for money. In accounting, an asset is any resource that a business owns or controls. It's anything that could be sold for money. The study of a balance sheet and assets and liabilities helps us to ascertain the equity value. This value can be used to value a company and understand if a company is overvalued or undervalued in the market. What is an asset?An asseAsset AllocationAsset allocation is an investment strategy by which an investor or a portfolio manager attempts to balance risk versus reward by adjusting the percentage of amount invested in an asset of a portfolio according to the risk tolerance of the investor, his/her goals and the investment time frame.Description: Financial assets vary in returns from each other depending on market conditions and user r
- Auction MarketAn auction market is the market where interested buyers and sellers enter ambitious bids and offers, respectively, at the same time. The price at which the security trade reflects the highest price the buyer is interested to pay and the lowest price at which the seller is interested to sell.The trade is executed at the price where the bid and the offer price match. It is different from an overBasis RiskBasis Risk is a type of systematic risk that arises where perfect hedging is not possible. When there is a variation between hedge/futures/relative price and cash/spot price of the hedged underlying at any given point of time, that variation is called ‘Basis’ and risk associated with it is called Basis Risk.Basis is simply the relationship between the cash price and future price of an underlyi
Related News
- Should investors make fresh bets in FMCG stocks? Rajat Sharma answersI think in the last 15-20 years, since I have been—18 years to be precise—since I have been looking at the market, I have never seen this kind of bullishness and fundamentals as strong as we have right now.
- IT stocks: A comeback which just needs a bit more confirmation; 7 stocks with an upside potential of up to 23%Just before the expiry of the June series contract, bulls were seen in a segment of the market which has been long ignored by them — IT stocks. Because the upward movement was taking place at the end of expiry, one could not rule out the element of short covering. If one looks a bit deeper in the trend in IT stocks, two things have become clear. That while the news and opinion has been negative, the price action has not been so bad as has been painted. Now let's look at what happened in the IT sector and why there could be a case for contrarian buying. Yes, the sector has some headwinds which not many had thought would appear two years back. But the bigger question is whether this phase of underperformance is about to get over or not. It might be time to shed the bias of negativity around large IT players.
- PSUs will continue to create wealth for investors over medium to long term: Manish SonthaliaThere is no reason to feel bearish after the recent bout of volatility and multiples in India are not very cheap but not very expensive either for a 15% sort of growth. Valuations are going to sustain. So that is how things are. Things are pretty settled by now.
- Markets to get surprised on the positive side if the NDA numbers are closer to 400: Manish SonthaliaManish Sonthalia, CIO at Emkay Investment Manager, discusses potential dark horses in commodities, specifically metal, and highlights sectors like public sector units, BFSI, banks, and IT performing well this year. sonthalia says everything seems to be priced into perfection or more than perfection when it comes to the extreme short term or even the short term.
- ITC share price targets go well beyond Rs 500 after Q4 results. Should you buy, sell or hold?ITC's Q4 results disappoint investors, shares drop nearly 1% to Rs 437.85. Brokerages raise target prices up to Rs 540. Citi sets target at Rs 515, warns of regulatory impact. Morgan Stanley targets Rs 506, CLSA at Rs 470. Motilal Oswal sees defensive potential, Kotak trims EPS, targets Rs 465. JM Financial holds highest target of Rs 540, emphasizes on cigarette volume growth and capital allocation strategy for rerating.
- Defensive stocks: FMCG is “passe”; 8 stocks from two sectors may be called “new defensives” with upside potential of up to 32%1994 to 2024 is a difference of 30 years, but there is one thing which has remained constant, advice to move to defensive stocks when markets are volatile or there is an event risk. Four questions need to be asked; first, what is a defensive stock? Second, is a stock which was considered a defensive in 1994 when the Indian economy was just opening, still a defensive stock in 2024 ? Third, should there be a new definition of defensive stock in 2024 ? Last but not the least, what are the new defensive sectors or stocks?
- Bajaj Finserv Mutual Fund launches Multi Asset Allocation FundThe scheme will be benchmarked against 65% Nifty 50 TRI + 25% NIFTY Short Duration Debt Index + 10% Domestic Prices of Gold. Nimesh Chandan and Sorbh Gupta (equity investments), Nimesh Chandan and Siddharth Chaudhary (debt investments) and Vinay Bafna (commodities investments) will manage this fund.
- Shift some money from capital goods & PSU bank stocks to FMCG, IT; top 9 bets: Sanjiv BhasinSanjiv Bhasin suggests focusing on Marico, Nestle, Hindustan Lever as top FMCG picks, adding Godrej Consumer. Largecap private banks like HDFC, ICICI, Kotak, Axis, IndusInd are recommended amidst various market dynamics and sector-specific opportunities. Bhasin says the wealth effect means real estate is the real play. Along with that, FMCG and IT will now be more defensive with pharma as a constituent for the index till the results.
- Dividend yield is more than just passive income: 6 PSU stocks with 4.14-5.67% yieldStock price and dividend yields have an inverse relationship but before this inverse relationship kicks in there is a level of equilibrium. Now this level of equilibrium is a subjective level which moves according to risk free interest rate level which FD provides. But there is another equilibrium level which mathematical equations don't solve. Stocks with reasonable probability of outperforming in a bearish market. The use of the word reasonable brings in the element of subjectivity.
- 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.
Load More
Trending DefinitionsRailways Budget 2024Interim Budget 2024Budget 2024 New Tax RegimeIncome Tax in Budget 2024Debt fundsSensexNiftyRepo rateMutual fundGross domestic productData miningAdvertisingProductMonopolyCryptographyDepreciation