How to Increase Dividend Yield

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Dividends are a source of income for stockholders.
Dividends are a source of income for stockholders. (Image: Cash image by Greg Carpenter from <a href='http://www.fotolia.com'>Fotolia.com</a>)

Investors will look at a company's dividend yield to see whether or not they should invest in the company. The dividend yield shows how much an investor will receive in dividends compared to how much the stock costs. Only the business can change its dividend yield. A company may want to change its dividend yield to make its stock look like a more attractive investment for investors. This in turn should raise capital for the company.

Determine the current dividend yield by dividing the dividends per share by the price per share of the stock. For example, Firm A paid $1 in dividends per share in 2009. The price of Firm A's stock was $10 a share. Therefore, $1 divided by $10 equals a dividend yield of 10 percent.

Determine the desired dividend yield for your company. In the example, the owners of Firm A decide they want their dividend yield in 2010 to be around 15 percent.

Change the amount of dividends your company pays to adjust dividend yield. In the example, if Firm A's stock is still at $10 a share, then Firm A should adjust its dividends paid per share to $1.50 to meet its desired 15 percent dividend yield.

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