What is Dividend Yield?
A company’s annual dividend per share divided by its share price, shown as a percentage.
Educational — not investment advice
Dividend yield expresses how much cash income a stock pays relative to its price. A $2 annual dividend on a $50 stock is a 4% yield.
Because price is in the denominator, yield moves inversely to price: if the share price falls and the dividend holds, the yield rises.
The trap most people miss
A very high yield is often a warning, not a gift. When a price collapses on bad news, the trailing yield spikes right before a likely dividend cut. Always ask whether the payout is actually sustainable.
Frequently asked about Dividend Yield
Is a higher dividend yield better?
Not automatically. An unusually high yield can signal a distressed company whose dividend is at risk of being cut.
What is dividend safety?
It is an assessment of whether a company can keep paying (and growing) its dividend from its earnings and cash flow — the sustainability behind the yield.
Related terms
Guides that use Dividend Yield
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This definition is for educational purposes only and is not investment, tax, or financial advice. Concepts are explained in general terms; how they apply to your situation can differ. Always do your own research.