Dividend Yield

Dividend yield is the annual dividend per share divided by the share price, expressed as a percentage. It tells you how much income you earn each year for every dollar invested in the stock. A higher yield means more income relative to price, but it must be judged alongside sustainability.

Use dividend yield to compare income across stocks, but pair it with the payout ratio to check whether the dividend is safe. A yield that looks unusually high is often a warning sign of a falling price or a payout at risk of being cut. Remember the yield rises as the price falls, so context matters.

A stock priced at 50 dollars that pays a 2 dollar annual dividend has a dividend yield of 4 percent. If the price drops to 40 dollars while the dividend holds, the yield rises to 5 percent.