What is Dividend Yield?
Annual dividends per share divided by share price, expressed as a percentage.
Formal Definition
Dividend yield expresses the annual cash dividend as a percentage of the current share price. It is a core metric for income-focused investors. A yield far above sector averages often signals a falling stock price rather than a generous payout, so investors check whether the dividend is covered by operating cash flow and a sustainable payout ratio.
In Simple Terms
It is the yearly cash payout you get from a stock as a percentage of what you paid for it, much like the interest rate on a savings account. A 4% yield means $4 back per year for every $100 invested.
Example
A stock priced at $50 that pays $2 in annual dividends has a 4% yield.