Dividend yield is termed as annual dividend divided by current stock price. Mathematically,
D.Y= A.D/C.S.P
D.Y=Dividend yield
A.D=Annual dividend
C.S.P=Current stock price
Thus, it should be clear that current stock price and dividend yield are inversely proportional.
Example: If you buy a stock for Rupees 2 and its current cost is rupees, 12 then the dividend yield will be .167 or .17 i.e. 17 % approximately. Moreover, if the dividend yield rises that means that there is a fall in the current stock price.
If the C.S.P that is current stock price rises, too rupees, 14 then the dividend yield will be .14 or 14 percent.
They are in generally a measure of investment’s productivity and some even see it as an interest rate earned on investments. It is assumed that only successful companies can pay dividend yield, so it s also categorized among the safer investments that are made in stock market. Here, are the list of some banks and there dividend yield.
| Name of the bank | CMP | Mcap(in crore) | Dividend Yield |
| Punjab and Sind Bank | 59.00 | 1653 | 5.6 |
| Syndicate Bank | 128.20 | 7985 | 4.3 |
| Vijaya Bank | 45.90 | 3935 | 4.2 |
| Dena Bank | 61.60 | 3453 | 3.4 |
| Karnataka Bank | 123.80 | 2305 | 3.3 |
| South India Bank | 27.70 | 3769 | 2.9 |
| UCO Bank | 95.70 | 9665 | 2.6 |
| J&K bank | 1551.95 | 7526 | 3.2 |
| Canara bank | 382.20 | 17454 | 2.9 |
| Oriental Bank | 273.80 | 8103 | 2.8 |
| Bank of Baroda | 892.65 | 37089 | 2.5 |
| State Bank Of Bikaner | 633.30 | 4423 | 2.3 |
| Bank of Maharashtra | 43.75 | 4620 | 2.1 |
| Union Bank(I) | 196.60 | 12181 | 2.1 |
It is generally, seen that we Indian do not rush to buy stocks, we analyse the situation and company before making any investments. It is because the Indian market i.e. BSE and NSE is quite volatile to say the least. The trends, rates and scenarios change with a blink of your eyelid. Moreover, dividend pay-out by companies was not as good as they promise to be. Let us have a look at some of the companies, which actually have succeeded in impressing the investors.
| Company | Financial Year 2010 | Financial Year 2011 | Financial Year 2012 | Financial Year 2013 |
| Colgate Palmolive (India limited) | 64.26 | 74.32 | 76.15 | 76.70 |
| Hawkins Cookers Limited | 57.41 | 66.57 | 70.31 | 62.03 |
| Emani Limited | 71.69 | 42.23 | 78.24 | 37.40 |
| Eicher Motors Limited | 49.64 | 39.28 | 34.68 | 37.30 |
| HDFC Limited | 36.39 | 37.77 | 39.43 | 39.95 |
| GRUH Finance limited | 32.73 | 42.36 | 37.41 | 30.77 |
These six companies have made impressive dividend over the years. The things that are common on these companies is that they belong to the high growth industries of the sector. They were liberal to say the least in paying dividend of about 30% of the net profit earned by them. This again leads to the common conclusion that only successful companies are able to live up to their promises.
As per a research, over one fifth of the total companies registered in BSE are sharing their 30 % of the profits earned by them in the financial year with their stakeholders. Notably, Indian companies are far behind in this process, which has influenced domestic stakeholders. Indian government should take a piece of advice from the Brazilians and should make it mandatory. This will allow the domestic investors who do not want to take risks into the market and in turn, this will increase chance of some ill companies of getting some business and improving their share hold over the market.
Comparing with Real Estate returns
While comparing these with Real estate, it could be compared with the rental income. Both Shares and real estate provides an avenue for capital appreciation. However, also provide an opportunity to earn a regular income stream, where Real estate offers rentals, Shares offer dividends. I have spoken to couple of realtors about the rental rates, just to reach a optimal figure for dividend amount.
As per their feedback, on an average the rental levels are expected to be 2-3%p.a for residential property and 4-6% in commercial property. The minimum Investments required for getting these rentals are in the range of Rs.50 lacs. We get property with cost like 20-30 lacs also, but those are generally in developing areas which are least expected to attract tenants.
So to arrive on right rate for dividend yield, we should be happy to invest with a share which gives 2% to 3% of return from dividend. And what could make us more happy is that we can invest even few thousand also.
