Investing Basics

What Is Dividend Yield?

Dividend yield is a company's annual dividend per share divided by its current share price, expressed as a percentage. It shows how much cash a shareholder receives each year relative to the price of the stock, and it changes whenever the share price or the dividend changes.

Formula

Dividend yield = annual dividends per share ÷ share price × 100.

Example

A stock priced at 50 that pays 2 per share in dividends each year has a dividend yield of 4%.

How to Read It

Because the yield moves inversely with the share price, a rising yield can reflect a falling price rather than a larger dividend. Dividends can also be reduced or stopped by the company, so past yield does not guarantee future income.

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🔗 Related Terms

Return on Investment (ROI) Capital Gain Asset

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.