Income
Dividend Yield
Annual dividend payments per share divided by the current share price, expressed as a percentage.
Example
A stock trading at $50 that pays $2 per year in dividends has a 4% dividend yield ($2 ÷ $50).
Common Misconception
Yield moves with price even if the dividend itself doesn't change — a falling stock price mechanically pushes the yield up, which can look attractive while actually reflecting bad news.
Why It Matters
Comparing dividend yield alongside payout ratio and earnings trends, rather than yield alone, helps separate a genuinely strong income stock from a value trap.