Definition – What is Dividend Yield?
Dividend Yield is the percentage of dividends per share in relation to the share price.
A dividend yield of ‘0%’ means that no dividends are paid.
A dividend yield of ‘100%’ means that 100% of the earnings of the corporation are paid in dividends.
A dividend yield of ‘7%’ means that 7% of the earnings of the corporation are paid as dividends.
Formula – How to calculate Dividend Yield
Dividend Yield = (Annual Dividends per Share / Share Price) x 100%
A company’s share price is $35 and pays annual dividends per share of $1.50.
Dividend Yield = ($1.50 / $35) x 100% = 0.04286 x 100% = 4.29%
Therefore, the dividend yield of this company’s stock is 4.29%.
Sources and more resources
- The Motley Fool – What is Dividend Yield? – How to calculate dividend yield.
- Wikipedia – Dividend yield – Some different methods for calculating dividend yield.
- The Balance – Understand Dividend Yield – A longer explanation of understanding dividend yield.
- Investopedia – Dividend yield – Another explanation of dividend yield.