The dividend yield is the ratio of the total dividends paid in a year to the current market price. The annual dividend expressed as a percentage of the final selling price of a stock is a simplified form of investment yield. The dividend yield is the ratio between dividend and stock price. In investment practice, dividend yield is one of the important yardsticks to measure whether an enterprise has investment value.

The dividend yield is one of the most important indexes in fundamental stock selection.

Dividend rate and dividend rate are not the same concept, but they are closely related. The dividend yield is equal to the dividend yield divided by the price-earnings ratio. Many people confuse these two concepts, thinking that the dividend yield of stocks with high dividend yield will be high, but it is not necessarily so.

Only stocks with high dividend yield and low P/E ratio have high dividend yield. See the following calculation formula.

Dividend yield = dividend per share/stock price * 100%= (earnings per share * dividend yield)/stock price = dividend yield/price-earnings ratio * 100%.

Therefore, only stocks with low valuation and high dividends will have high dividend yield.

For example, the dividend yield of Kweichow Moutai is 52%, which is much higher than that of bank stocks, but it is only 1.2% at current prices, but it is lower than most bank stocks, because Kweichow Moutai has a higher P/E ratio.

Therefore, as an investor, we should not only look at the dividend yield, but also pay attention to the dividend yield.

For a long time, the China stock market has been quite opposed to the cash dividend of stocks, thinking that dividends are to share one's own money, and at the same time, dividends and ex-rights also reduce the company's share price. Shareholders bear the tax, but their assets are reduced.

Fundamental stock selection usually takes dividend yield as one of the important stock selection indicators in the actual investment process. The reason for this is the following：

1, the stable high dividend yield means that the company has the actual ability to pay, and real money shows that the performance is relatively reliable.

2. Companies that don't pay dividends may waste a lot of money on a series of stupid diversified mergers and acquisitions.

3. The annual dividend will bring stable cash flow to shareholders, which will be used for daily expenses when the stock price is low, which is conducive to long-term shareholding.

4. The reinvestment of dividend funds can generate compound interest and support or boost the stock price.

Historical data show that stocks with high dividend yield are more flexible.

6. The proportion of foreign shares is rising, and high dividends are their favorite.

7. The hen has laid eggs, why not lose weight, because the body will have the ability to repair itself. The same is true of stock dividends!