Dividend Yield
The annual dividend payment divided by share price, showing the cash return relative to investment cost and allowing comparison of dividend-paying investments.
Dividend Yield
A financial ratio that shows the annual dividend income as a percentage of a stock’s current market price, calculated by dividing the annual dividend per share by the current share price.
For example, if a company pays annual dividends of $2 per share and its stock trades at $50 per share, the dividend yield would be 4%, allowing investors to compare the cash return with other income-producing investments.
Dividend yield helps income-focused investors evaluate potential investments, with higher yields generally offering more current income. However, unusually high yields may signal market concerns about dividend sustainability. The ratio fluctuates with share price changes even when the dividend amount remains constant.