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![IPO_ACADEMY Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::1642928801574273033.png) IPO Investor Academy [@IPO_ACADEMY](/creator/twitter/IPO_ACADEMY) on x 14.7K followers
Created: 2025-07-23 17:14:34 UTC

📢 Why high dividend yield isn’t always a good thing?

Many get excited seeing stocks with 5–6% dividend yield, thinking — “Free money every year”
But, it can also be a TRAP. 

How? Let’s break it down

What is Dividend Yield?

If a company gives ₹10 dividend 
and its stock price is ₹100

Dividend Yield = (10 ÷ 100) × XXX = XX%

So, if dividend yield has to increase —
• Dividend has to go up
• Or stock price has to go down

And here’s the problem —
Sometimes the yield looks high because the stock price is falling, because the business is in trouble.

So what should you really check?

✅ Payout Ratio

Payout Ratio = Dividend per Share ÷ Earnings per Share

This shows how much of the company’s profit is being paid out.

Ideal range: 25%–40%

If it’s too high (like 60–90%),
The company may not be reinvesting enough for future growth.

Dividends are just a bonus — not the main reason to invest.

In the long run growth creates Wealth.


XXX engagements

![Engagements Line Chart](https://lunarcrush.com/gi/w:600/p:tweet::1948069240533393482/c:line.svg)

**Related Topics**
[money](/topic/money)
[stocks](/topic/stocks)
[dividend yield](/topic/dividend-yield)
[investment](/topic/investment)
[ipo](/topic/ipo)

[Post Link](https://x.com/IPO_ACADEMY/status/1948069240533393482)