Understanding Dividend Yield
Dividend yield measures how much a company pays in dividends relative to its stock price. It's an important metric for income-focused investors.
Dividend Yield Formula
Dividend Yield = (Annual Dividend per Share / Current Share Price) × 100
High Dividend Yield Stocks in India
Sectors known for high dividends include:
- PSU Banks: Often yield 3-6%
- Coal/Mining: Coal India yields 5-8%
- Oil & Gas: ONGC, IOC yield 4-7%
- IT Services: TCS, Infosys yield 2-4%
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Caution
High dividend yield isn't always good. It could mean the stock price has fallen due to company issues. Always research the company's fundamentals.
Dividend Investing Strategy
- Focus on companies with consistent dividend history
- Look for dividend growth over years
- Check payout ratio (should be sustainable)
- Diversify across sectors
- Reinvest dividends for compounding