What is Dividend Yield?
Nexa Consultancy | Startup & Finance Glossary
The Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is expressed as a percentage and is a way to measure the return on investment for a stock, based on the dividend income alone.
For Startups: This metric is generally not applicable to startups. High-growth startups rarely pay dividends; instead, they reinvest all their profits (if any) back into the business to fuel further growth. The primary return for a startup investor comes from capital appreciation (an increase in the company's valuation), not dividends.
Calculation: Dividend Yield = (Annual Dividend per Share / Market Price per Share) * 100%.
Example: A mature, public company pays an annual dividend of ₹10 per share, and its stock price is ₹500. The dividend yield is 2%.