Dividends
Dividend Yield
Annual Dividend / Stock Price
Definition
Annual Dividend Per Share ÷ Stock Price × 100 = Income return
Explanation
Dividend yield shows the annual return from dividends as a percentage of the stock price. A 4% yield means $1,000 invested gives you $40 per year in dividends. Compare this to bank savings rates to evaluate the income potential of dividend stocks.
Example
Stock price $50, annual dividend $2 → Dividend yield 4%