BAJAJ BROKING

Notification
No new Notification messages
🚨 Trading Holiday 🚨
The NSE and BSE will remain closed for trading and settlement on Friday, April 18, 2025, on account of Good Friday.
Open a Free Demat Account
Pay ZERO maintenance charges for the first year, get free stock picks daily, and more.
Trade Now, Pay Later with up to 4x
Never miss a good trading opportunity due to low funds with our MTF feature.
Track Market Movers Instantly
Stay updated with real-time data. Get insights at your fingertips.

Dividend Yield Calculator

Investing in the stock market is a unique prospect that has the potential to change an investor’s life. Share market investing has been the centre of attraction for Indians for a while now. Investing in a business that can grow in the coming years presents an exciting opportunity for stock market investors. While rising stock prices can help you grow your investment, there is another lucrative benefit that you get in addition. This is known as Dividends.

 

A dividend is a portion or share of the company’s profits that is distributed amongst its shareholders. As a shareholder, you can not only enjoy growth with rising share prices of your invested stock but also get additional payout through dividends. A shareholder is a part owner of the company and thus a recipient of their profits as well. Established companies distribute dividends periodically. Such companies attract investors like no other, as they provide a unique opportunity to grow your capital in multiple ways.

What is Dividend Yield?

The dividend yield is calculated in terms of percentage. A dividend yield simply means the percentage of profit the company is distributing to its shareholders against their investments. The dividend yield is a ratio of the dividend per share or DPS, divided by the market price of the share. If a company has a dividend yield of 5%, it means that it if the share price is Rs.100, it pays a dividend of Rs. 5 per share.

The dividend yield is usually higher for mature companies, whose share prices have grown significantly in the market. The upside potential of their share prices is not that significant after a certain point, and they devise dividends to distribute profits and incentivise investors.

How to calculate dividend yield using a dividend yield calculator?

The method of calculating dividend yields is simple. There are two components involved in its calculation, Dividend per share or DPS, divided by its current stock price.

Dividend Yield = Current Annual Dividend Per Share / Current Price of the Stock

To understand it with an example, let us say that the current annual dividend per share is Rs. 6 and the current market price of the shares is Rs. 120 per share. The dividend yield, in this case, would be:

Dividend Yield = 6/120 = 5%.

How to interpret the dividend yield calculator?

The dividend yield calculator can give you a picture of the dividend returns that you can enjoy on your favourite stock. Some investors use the dividend yield calculator to screen stocks for investment as well. However, the interpretation of dividend yield is another attribute that you should understand before you consider it a parameter to choose stocks for investment.

  • It’s important for one to familiarize oneself with the dividend yield trap when the stock price falls faster than the earnings. You need to be careful about it. In due course, companies are forced to cut dividends due to this, and then the entire dividend story unravels.
  • While comparing two utility stocks, ensure that the sectors are similar. For instance, you can’t compare a utility and an e-commerce company when you compare dividend.
  • At the time of checking the dividend yields, you must also consider the pay-out ratio analysis. This ratio is nothing but the amount of a company’s net income that goes towards dividends. Usually, a company’s payout ratio should be examined basis on the nature of the industry. Still, markets tend to prefer high dividend yield stocks because it’s an indication that the company has the cash to pay out.

How do you calculate dividend payout?

Dividend payout is essentially the percentage of profit that the company distributes as dividends compared to its total income.

Investors usually calculate the dividend payout ratio to gauge an estimation of how much a company pays to its investors as dividends and how much it keeps for reinvesting and debt repayment. Simply put, the dividend payout ratio (DPR) is the dividend paid against net income.
DPR is calculated by investors basis of this formula.

DPR = DP/NI

DP = Dividend Paid

NI = Net Income

What is a good dividend yield for a stock?

A good dividend will depend on various factors. The most important of these factors is the sector. The dividend yield for various sectors may be different. Other critical factors that contribute to dividend yield are market conditions and the current price of shares. If a company is relatively new to the market, it would want to reinvest more in its organizational growth rather than paying high dividends. This does not make them a bad investment choice as this may result in share price appreciation in the future. Download our trading app to know more.

Share this article: 

investment-card-icon

Calculating PPF

Learn how to use a PPF calculator to estimate your returns, interest, and maturity amount. Simplify your PPF planning with accurate projections at Bajaj Broking!

investment-card-icon

Profit After Tax

Profit After Tax (PAT) shows a company’s net earnings. Get the formula, calculation steps, and strategies to improve PAT for better financial performance.

investment-card-icon

Unclaimed Funds

Unclaimed Funds refer to forgotten money from bank accounts, insurance, or investments. Check if you have any unclaimed assets and reclaim what's yours today!

investment-card-icon

How to Open an NPS Account Online

How to open an NPS account hassle-free in just a few steps. Secure your retirement with a government-backed pension scheme and enjoy tax benefits for a stable future!

investment-card-icon

Annuity in NPS

Annuity in NPS ensures financial security post-retirement. Check features, benefits, annuity types, tax aspects, and steps to purchase the right plan.

investment-card-icon

Free Cash Flow

Free Cash Flow (FCF) shows how much cash a company generates after expenses. Know its importance, calculation, types, benefits, and limitations.

investment-card-icon

Rising Wedge Pattern

The rising wedge pattern signals potential reversals in market trends. Check key indicators, confirmations, and trading insights to improve decisions.

investment-card-icon

Receivables Turnover Ratio Explained

Receivables Turnover Ratio shows how efficiently a business collects debts. A higher ratio means faster collections, improving cash flow and financial health.

investment-card-icon

Net Working Capital

Net Working Capital (NWC) is key to business health. Find out its importance, components, calculation, types, and strategies to optimize cash flow efficiently.

investment-card-icon

Dark Cloud Cover Pattern

The rising wedge pattern signals potential reversals in market trends. Check key indicators, confirmations, and trading insights to improve decisions.

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

9.5 lakh+ Users

icon-with-text

4+ App Rating

icon-with-text

4 Languages

icon-with-text

₹4400+ Cr MTF Book

icon-with-text