Capital Gain

Barring the element of capital gain, dividend yield indicates the return on investment for a stock and is generally computed as the ratio of annual dividend per share to the price per share. In simpler terms, dividend yield helps analysts find out the amount of cash flow generated by every unit of currency that the investor invests in equity. The ratio also is used to find out whether the stocks of a company are under priced or overpriced. While a high dividend yield is considered as an evidence of an under priced stock, a low dividend yield represents the opposite position. Mirroring all these perspectives, the B&E Power 100 has considered dividend yield as a measure of the yield paid out by the companies to their shareholders in the form of dividends.

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Source:- IIPM-Business and Economy, Initiative:- Prof. Arindam Chaudhuri - 2006