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NISM Certifications · NISM-Series-XV: Research Analyst · Terminology in Equity and Debt Markets

A company reports net profit after tax of Rs 60 crore, with 6 crore shares outstanding, and pays total dividends of Rs 18 crore. Its share trades at Rs 200. What are the dividend payout ratio and dividend yield respectively?

The dividend payout ratio is 30% and the dividend yield is 1.5%. Payout equals dividends of Rs 18 crore divided by profit of Rs 60 crore, while yield equals dividend per share of Rs 3 divided by the market price of Rs 200.

  1. A30% and 1.5%Correct
  2. B30% and 15%
  3. C18% and 1.5%
  4. D70% and 1.5%

Explanation

Dividend payout = 18/60 = 30%. DPS = 18/6 = Rs 3; dividend yield = 3/200 = 1.5%. Using 15% results from dividing DPS wrongly, 70% is the retention ratio, and 18% is not a valid ratio from this data.

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