The dividend yield is a way to measure how much money flow you are getting for each of your buck invested in an equity position.
Importance of debt ratio
The dividend yield ratio indicates the amount a company pays out in dividend each year relative to its share price. Dividend yield tells an investor the yield he/she can expect by purchasing a stock. It depends on how much a share price moves during the day, it constantly changes as the price of the share changes.
Dividend Yield Ratio = Dividend Per Share / Market Value Per Share
Suppose a company declares dividend at $1.70 per share. The face value of a share of the company is $15 and the market price per share is $20. The dividend yield ratio according to the formula will be:-