# Dividend Yield Ratio

**Dividend yield is expressed as an annual percentage and is calculated as the company's annual cash dividend per share divided by the current market price of the stock. This ratio is important for those investors who are interested in the dividend income. It is calculated as follows:When shareholder purchases the shares in the secondary market, there is a difference between his yield (rate of return) and dividend declared by the company because he calculates dividend per share as follows: rate of dividend/paid up value of shares. then he calculates yield. For example, ABC company declares 20% dividend and its share price is of Rs. 10 paid up and the market price of which is Rs. 16 then the yield will be calculated as follows:The effective earning rate to the investor in equity shares is 12.5% instead of 20% as declared by the company.**

**NEXT - Market Test Ratios: Price/Cash flow Ratio**

**Table of Contents****1) Market Test Ratios: Introduction2) Market Test Ratios: Earning per Share Ratio3) Market Test Ratios: P/E Ratio4) Market Test Ratios: Payout Ratio5) Market Test Ratios: Dividend Yield Ratio6) Market Test Ratios: Price/Cash flow Ratio7) Market Test Ratios: Price to book value Ratio8) Market Test Ratios: Price/Sales Ratio9) Market Test Ratios: Price/Earnings To Growth Ratio**