# Dividend Yield Calculator

## What is Dividend?

A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares of stock. It represents a portion of the company's profits that is distributed to its shareholders as a reward for their investment in the company. Dividends are typically paid out regularly, such as on a quarterly basis, although the frequency can vary.

## ‍What is Dividend Yield?

Dividend Yield is the percentage representing the annual dividend income relative to a stock's current market price, aiding investors in assessing potential returns.

## What is a Dividend Yield Calculator?

A Dividend Yield Calculator is a financial tool that computes the dividend yield of an investment, typically expressed as a percentage. It calculates the percentage of the annual dividend in relation to the current stock price, providing a quick way to compare investment options.

This calculator is valuable for investors seeking income from dividend-paying stocks and allows for easy comparison of different investment opportunities.

## How Does a Dividend Yield Calculator Work?

A Dividend Yield Calculator works by utilizing a simple formula to determine the percentage yield of a stock or investment based on its annual dividend and current market price per share. The calculation involves two key components.

Annual Dividend per Share: This is the total annual dividend payment made by the company to its shareholders, divided by the total number of outstanding shares.

Current Market Price per Share: This represents the current trading price of a single share in the stock market.

Dividend Yield = (Annual Dividend Paid /Purchased Price) * 100

Example: Suppose you are interested in investing in Company XYZ, which currently pays an annual dividend of ₹2 per share. The current market price of one share of Company XYZ is ₹50.

Using the Dividend Yield Formula:

Dividend Yield = (Annual Dividend Paid / Purchased Price) * 100

Dividend Yield = (2/50)*100

Dividend Yield = (0.04)*100

Result: Dividend Yield=4%

Now, to express this yield in Rupees, you would need to consider the total investment amount. Let's say you decide to invest in 100 shares of Company XYZ at ₹50 per share:

Total Investment=Number of Shares × Current Market Price per Share

Total Investment= 100*50= ₹5000

Now, to find the annual dividend income in Rupees, you can use the dividend yield percentage:

Annual Dividend Income=Dividend Yield × Total Investment

Annual Dividend Income=4% × ₹5000= ₹200

Therefore, with an investment of ₹5000 in Company XYZ, you can expect an annual dividend income of ₹200, assuming the dividend yield remains constant at 4%.