Sources: IRS, SEC, Federal Reserve, U.S. Bureau of Labor Statistics & U.S. Census Bureau. See our editorial standards.
A ratio showing how much a company pays in dividends each year relative to its share price, expressed as a percentage.
Definition: A ratio showing how much a company pays in dividends each year relative to its share price, expressed as a percentage.
Dividend yield lets you compare the income different stocks generate regardless of share price. A high yield can signal strong income — or a falling share price that has inflated the ratio. Yields between 2% and 5% are typical for established dividend payers; anything far above that warrants a closer look at sustainability.
Dividend yield = (annual dividend per share ÷ current share price) × 100.
A stock paying $3 per year while trading at $75 has a 4% dividend yield. If the price drops to $50 with the dividend unchanged, the yield rises to 6%.
Put this concept to work with our free Dividend Calculator.
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