1. DIVIDEND YIELD By :- Pramod & Kapil

2. A Dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, it can either re-invest it in the business (called retained earnings), or it can distribute it to shareholders. 3. Introduction The Dividend Yield is the dividend per share, divided by the market price per share. A financial ratio that shows how much a company pays out in dividends each year relative to its share price.It is often expressed as a percentage.Dividend Yield is also known as Dividend-Price Ratio.Divend Yeild = Dividend per share / Market Price per share. 4. Significances & Interpretations Dividend yield is used to calculate the earning on investment (shares) considering only the returns in the form of total dividends declared by the company during the year. The ratio is important for those investors who purchase shares to earn dividend income. Also the shares that earn higher dividend income can be sold in the market at higher prices that usually results in higher profits for the investor. Depending solely on dividend yield figure for making investment in a company may not be a wise decision. A high dividend yield percentage may be due to a recent decrease in the market price of the stock of the company due to sever financial troubles. It may have to reduce the amount of dividends in future that may further reduce the market value of its stock. Therefore, a company with attractive dividend yield figure may not always be the best option. 5. Example Comparison of two companies: The following information is related to PQR company and XYZ company for the year 2013:PQR companyCash dividend declared and paid during the yearXYZ company750,000124,80025,00,00012,00,000Number of shares of common stock50,00024,000Par value of a share5050Market value of a share6052Common stock 6. Both the companies belong to same industry. PQR is an old and well established company where as XYZ is a new company. The historical data shows that the PQR has a stable annual dividend distribution to stockholders. Required:Calculate dividend yield ratio of both the companies. Which company would you recommend for investment in shares? Explain with reasons.solution PQR CompanyDividend yield ratio750,000/50,000124,800/24,000= 15.00Dividend per shareXYZ Company= 5.20(15/60) 100(5.20/52) 100= 25%=10% 7. THANK YOU :)