dividend yield

Investments in equities fetch returns in two forms. One is capital appreciation and the other is dividend. In a high growth economy like India, the focus of most investors tends to be on capital appreciation. They do not pay much attention to dividends. This is a mistake. Dividends play a key role in the valuation of a company. In value investing, dividend yield is a key parameter which determines whether a stock is attractive. It has been observed that a company which has high dividend yield is expected to contain downside for investors in comparison with a company which has low or no dividend yield. A company’s dividend yield is calculated by dividing dividend per share paid by the company by its share price. (more…)