Dividend Yield
Shows annual dividends per share as a percentage of the current share price.
Formula
Dividend Yield = Annual Dividend per Share / Share Price x 100%
Worked exampleAn annual dividend of $2.40 divided by a $60 share price gives a 4.0% dividend yield.
Calculation steps
- Total the expected annual dividend per share: $2.40.
- Use the current share price: $60.
- Divide and multiply by 100 to get 4.0%.
How to interpret it
A higher yield increases current income but can also signal that the market expects a dividend reduction or weaker growth.
Industry context
REITs, utilities, banks, and mature companies often have different payout norms from growth companies.
Common mistakes
- Do not use a special dividend as if it repeats annually.
- Keep trailing and forward yield labels clear.
- Check payout coverage, debt, and dividend currency.