What is dividend yield and why its important to invest in divided paying stocks

Dividend yield is a financial ratio that measures the amount of dividends paid by a company in a given year relative to the company's stock price. It is expressed as a percentage and is calculated by dividing the annual dividend per share by the stock price per share.

For example, if a company's stock price is $100 per share and it pays an annual dividend of $5 per share, the dividend yield would be 5%.

Dividend yield is an important consideration for investors because it represents the return on investment they can expect to receive from a company's dividends. Companies that pay dividends tend to be more established and financially stable, and the dividends they pay can provide a steady stream of income for investors.

Additionally, dividend-paying stocks can provide a measure of downside protection in a market downturn because the dividends provide a source of income that can offset some of the losses from declining stock prices.

It's worth noting that dividend yield is just one factor to consider when evaluating a potential investment. It's important to also consider other factors such as the company's financial health, growth prospects, and industry trends, as well as your own investment goals and risk tolerance.