Dividend yield ratio

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 21, 2021

Dividend yield ratio shows the percentage return to the investor on the market value of the preference or ordinary share he owns. Like dividend coverage ratio, this ratio is also calculated separately for each class of shares.

Formula

For preference shares:
dividend-yield-ratio-formula-preference
and for ordinary shares:
dividend-yield-ratio-formula-ordinary
Dividend is very often a major part of all that a shareholder gets from the company for his investment in the shares. Hence, dividend yield ratio frequently represents the significant portion of the return going to the shareholder in the form of dividends.
Example

Dividend yield ratio

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