Dividend yield
Principles of Finance glossary · Valuation of Bonds & Stocks
Definition
Annual dividend divided by share price.
Dividend yield in plain English
Dividend yield tells you how much cash a stock pays you each year compared to what it costs to own — basically the "interest rate" of owning that stock. If a share costs $100 and pays $3 in dividends a year, the dividend yield is 3/100 = 3%. It's handy for comparing income across stocks: a higher yield means more cash back per dollar invested, though a super-high yield can sometimes be a warning sign that investors expect the payout to get cut. Just remember it only counts the cash payouts, not any gain or loss from the share price itself changing.
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