The dividend yield of a company is a financial ratio that measures the quantum of cash dividends paid out to shareholders relative to the market value per share.
It is calculated by dividing the annual dividend per share by the market price of the share.
Dividend Yield = 100% * (annual dividend per share/market price per share)
It is often expressed as a percentage of the market price of the share.
Here's an example...Suppose company X's stock price is Rs 300 and the company's dividend per share is Rs 10. Using the above formula, the dividend yield of a company is 3.3%.
This means that for every Rs 100 invested in the share, investors earn a dividend of Rs 3.3.