Dividend yield is the annual dividend payments to stockholders represented as a percentage of the current stock price. This figure indicates how much future income an investor may expect from a stock based on the price he might pay for it today, assuming the dividend remains steady.
Dividend Yield Formula
The formula for calculating dividend yield is as follows:
Dividend Yield = Dividend per share / Market value per share
Where:
- Dividend per share is the company’s total annual dividend payment, divided by the total number of shares outstanding
- Market value per share is the current share price of the company
For example, if a stock is now trading at Rs 100 per share and the annualized dividend is Rs 5 per share, the dividend yield is 5%. To remind the formula, annualized dividend divided by share price is yield. In this scenario, Rs 5 divided by Rs 100 rupees = 5%.
The dividend yield equation is used to determine the cash flows that an investor receives from holding stocks or shares in a company. As a result, the ratio displays the proportion of dividends paid for each penny of stock.
A high or low yield is determined by factors such as the industry and the company's commercial life cycle. A fast-growing corporation, for example, may find it appropriate not to pay dividends. The money may be better used reinvesting in the company to help it expand.
In contrast, a well established mature company may have a high yield due to a lack of prospective high growth projects. As a result, the yield ratio may not necessarily represent whether a company is good or bad. Investors use this ratio to determine whether a security is suitable with their investment plan.
Dividend Yield Ratio across Industries
Dividend yield ratios should only be compared for companies in the same industry because average yields vary considerably between industries. The following are the avg. dividend yields for several industries:
- Basic materials industry: 4.92%
- Financial services industry: 4.17%
- Healthcare industry: 2.28%
- Industrial industry: 1.76%
- Services industry: 2.37%
- Technology industry: 3.2%
- Utility industry: 3.96%
| S.No. | Name | CMP Rs. | P/E | Div Yld % | NP Qtr Rs.Cr. | Qtr Profit Var % | Sales Qtr Rs.Cr. | Qtr Sales Var % | ROCE % |
| 1 | REC Ltd | 110.7 | 2.85 | 10.4 | 2732.12 | 1.48 | 9955.99 | -0.92 | 9.11 |
| 2 | Banco Products | 206.15 | 10.26 | 9.7 | 51.73 | 5.08 | 627.92 | 14.4 | 23.54 |
| 3 | Standard Inds. | 28.05 | 1 | 8.92 | 1.45 | -81.6 | 3.64 | 75.85 | 254.09 |
| 4 | Natl. Aluminium | 78.1 | 5.49 | 8.34 | 170.12 | -77.25 | 3489.57 | -2.86 | 33.98 |
| 5 | RSWM Ltd | 325.65 | 3 | 7.68 | 20.13 | -55.02 | 953.79 | 0.08 | 18.2 |
| 6 | Coal India | 226.1 | 5.35 | 7.5 | 6043.99 | 106.07 | 29838.07 | 28.11 | 54.29 |
| 7 | GAIL (India) | 93.35 | 5.15 | 7.22 | 1304.61 | -54.58 | 38680.36 | 77.77 | 23.3 |
| 8 | Oil India | 209.65 | 2.77 | 6.8 | 2115.83 | 64.65 | 10123.74 | 39.56 | 21.55 |
| 9 | H U D C O | 53.3 | 6.06 | 6.62 | 396.31 | 7 | 1738.61 | 0.1 | 9.16 |
| 10 | ICICI Securities | 525.05 | 13.03 | 6.45 | 300.41 | -14.47 | 858.46 | 0.24 | 27.03 |
| 11 | PTL Enterprises | 32.25 | 15.82 | 6.2 | 8.89 | -26.29 | 16.09 | 1.77 | 9.31 |
| 12 | CESC | 75 | 7.42 | 5.98 | 319 | -8.96 | 3913 | 11.99 | 12.75 |
| 13 | Oracle Fin.Serv. | 3238 | 15.51 | 5.87 | 397.75 | -11.13 | 1376.03 | 7.42 | 36.03 |
| 14 | Power Grid Corpn | 220 | 10.45 | 5.35 | 3650.16 | 8.11 | 11150.57 | 8.61 | 11.48 |
| 15 | Tide Water Oil | 1067.35 | 15.23 | 5.15 | 20.43 | -36.16 | 448.02 | 13.69 | 21.71 |
| 16 | Swaraj Engines | 1624.4 | 16.8 | 4.92 | 35.88 | 6.25 | 384.75 | 11.98 | 49.68 |
| 17 | Steel City Sec. | 61.2 | 7.22 | 4.92 | 3.23 | -14.55 | 14.33 | -13.52 | 18.35 |
| 18 | Glenmark Life | 436.2 | 12.75 | 4.79 | 106.88 | -7.22 | 509.3 | -9.34 | 42.25 |
| 19 | Rites | 376.25 | 16.58 | 4.52 | 140.2 | -21.63 | 659.08 | -13.91 | 30.16 |
| 20 | Sarla Performanc | 45.2 | 9.52 | 4.44 | 9.61 | -35.48 | 115.58 | 9.66 | 13.6 |
| 21 | IIFL Securities | 69 | 7.92 | 4.33 | 55.47 | -23.01 | 316.61 | 5.88 | 32.38 |
| 22 | NHPC Ltd | 42.2 | 10.97 | 4.28 | 1685.81 | 14.99 | 3366.02 | 14.47 | 6.5 |
| 23 | I R F C | 34.4 | 6.96 | 4.11 | 1714.28 | 14.17 | 5809.8 | 23.88 | 5.11 |
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