Dividend Yield
Quick definition: Dividend yield is the annual dividend per share divided by the share price, shown as a percentage: the income you get for each dollar invested.
In plain English
Dividend yield compares the cash a stock pays you each year with what the stock costs today.
Dividend yield = annual dividend per share ÷ share price × 100
Example
A stock pays $2 a year in dividends and costs $50. The yield is $2 ÷ $50 = 4%. If the price falls to $40 and the dividend stays at $2, the yield rises to 5%.
Why it matters
Yield lets you compare the income from different investments on equal terms. But the yield moves whenever the price moves, so it is a snapshot, not a promise.
Common mistakes
- Chasing the highest yield. An unusually high yield can mean investors expect a dividend cut. See yield trap.
- Mixing up trailing yield (dividends paid over the past year) with forward yield (expected dividends).
Investment Disclaimer
All information and tools on this website are provided for informational
purposes only. The calculations, examples, and projections are simplified
estimates and may not reflect real-world investment results.
Nothing on this website should be interpreted as financial, investment,
tax, or legal advice. You are solely responsible for your investment
decisions and any outcomes resulting from them.
Past performance and projected returns do not guarantee future results.
Always conduct your own research and consult a qualified financial advisor
before making investment decisions.