Dividend yield is simply the annual dividend income a stock or ETF pays, expressed as a percentage of its current share price. If a stock trades at $100 and pays $4 per share in dividends over a year, its dividend yield is 4%. It’s a quick way to compare how much cash income different investments generate relative to what they cost today.
A few things worth keeping in mind: yield moves in the opposite direction of price (if the price drops but the dividend stays the same, the yield goes up), and a very high yield can sometimes be a warning sign that the market expects the dividend to be cut rather than a genuine bargain. Yield also isn’t the same as total return — it ignores any change in the share price itself.
Want to check the yield on a stock you’re watching? Plug the numbers into our Dividend Yield Calculator to see the percentage instantly.