The dividend yield is also called dividend-price ratio. It is given out by calculating the annual dividend payments of a company divided by its market cap. It can also be calculated by dividing the dividend per share by the price of a single share.
The understanding of dividend yield will help an investor to compare the attractiveness of a stock for better investment. You can foretell the returns that the stock will offer you in future. If you want to get regular income from your dividend paying stocks then invest in those stocks that are paying high and stable dividend for past few years.
The older and reputed companies have better and higher dividend yield than the newer companies. Some of the fast growing companies may not at all give out dividend yield as the dividend is not given out and the profit is reinvested for the growth of the company.
It is therefore important to understand the basics of dividend yield to get profit out of the dividend paying stocks.

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