All you need to know about Dividend Yield

By | 27/09/2018

Business firms assign a fraction of their output as dividend. The surplus amount is kept so as to reinvest in the business. The shareholders of the company are paid dividends. Best Financial Advisor Kuber Mindz brings to your notice that dividend yield measures the quantum of earnings by way of total dividends which investors make when they invest in that company.

High dividend yield stocks are considered to be good investment options during times of volatility due to good pay-off options. Investing in high dividend yield stocks creates an efficient tax-saving asset. As an investor, you have to verify the valuation and dividend-paying track record of the company.

What is Dividend Yield?

Dividend Yield is a financial ratio indicating the amount of dividends paid by a particular company yearly relative to its share price. It’s a percentage that’s calculated by dividing the monetary value of dividends paid in a year per share of stock held by the monetary value of one share of stock. Certified Financial Planner Kuber Mindz observes that the dividend yield is also known as the dividend-price ratio. Historically, the higher the dividend yield of a company, the more favorable it was among investors.

Features of Dividend Yield Funds

  1. Raising additional finances

Those of us who desire a regular stream of income/regular stream of income can opt for Dividend Yield Funds. The only thing you must check is how stable the dividends offered by a company.

  1. Decide based on consistency’

How consistent is the company in paying dividends? The answer to this question will tell you whether you must go for the company or look for another.

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Merits of Dividend Yield Funds

  1. Best-suited for retired investors

Dividend Mutual Funds are best suited for senior citizens especially. This is due to their income generating nature.

  1. Source of income for investors

Dividend Mutual Funds prove to be a source of income to investors that is reliable and steady in nature. Just be sure to purchase Dividend Mutual Funds in an IRA or retirement account if paying taxes from it is not what you are looking for.

  1. Stability

Business companies with a track record of paying dividends are mostly preferred by investors because that indicates positively on its stable nature.

  1. Appreciation of wealth

A company paying dividends to investors offers not only income but also capital appreciation. This means your income stream can raise to some more extent.

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