Dividend Yield

Annual dividend per share divided by the stock price.

What Is Dividend Yield?

Dividend yield tells you how much cash income you'd receive relative to the price you pay for a stock. A 3% yield means you earn $3 annually for every $100 invested. It's the primary metric for income-focused investors.

Formula

Dividend Yield = Annual Dividends Per Share / Stock Price × 100

Why It Matters

High yields can be attractive for income, but very high yields (above 6-8%) are often unsustainable 'yield traps' — the price has fallen because the market expects a dividend cut. Always check the payout ratio alongside yield.

Typical Ranges: 1-2% is typical for growth companies. 2-4% is solid income. Above 5% warrants investigating sustainability.