Dividend yield of a stock is the rupee dividend paid out by the company divided by the market price of the stock. For example, if the company has paid rupee dividends of Rs.25/share and the market price of the stock is Rs.400/- then the dividend yield of the stock will be 6.25% (25/400). It is hard to define what high dividend yield is but normally any dividend yield of above 5% is considered to be an attractive yield since dividends are tax-free in the hands of the shareholder. 

Before getting into dividend yield stocks, there are 3 things you need to cautious about. Firstly, don’t buy dividend yield stocks where the price has fallen sharply in the recent past. So stocks like Reliance Capital and Cox & Kings may look attractive on dividend yield terms but they have larger issues. Secondly, see if the dividends have been sustained over time because only then the dividend yield is credible. Lastly, remove the effect of special dividends and one-time dividends when you calculate dividend yields to get a clearer picture. Here are five stocks to look at for dividend yield purposes.

NALCO: is a zero debt aluminum company based out of Orissa. The stock price of NALCO has fallen to Rs.42 and that gives you a dividend yield of 13.66%. The stock could have price risk but that is more than made up by the hefty dividend yield.

Vedanta: the company from the Anil Agarwal group has traditionally been a generous dividend paymaster. With the recent price correction, Vedanta is available at a dividend yield of 13.5%. That is an attractive dividend yield entry point.

Hindustan Zinc is one more stock from the metals space specializing in Zinc production and part of the Vedanta group. The stock after the recent correction is available at a dividend yield of 9.29% at this point of time.

Indiabulls Housing: has been in the news for the wrong reasons but it does have a strong loan book and the recent merger with LVB should help the bank to better capitalize. The stock is available at a dividend yield of 8.93% and is a good bet at these levels.

SJVN: is into the generation of hydroelectricity in the Northern region. It is a reasonably priced stock available at around Rs.24 and offers a dividend yield of 8.67%. It is a profitable government-owned company.

Apart from the above, there are a host of other oil marketing companies and refiners that are also available at attractive dividend yields. You can take a pick accordingly.