Dividend Yield
Category: finance
A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.
The yield is the "income percentage." If the stock is $100 and the dividend is $5, the yield is 5%. It allows investors to compare the income potential of a stock against the interest rate of a bond.
Common Examples
- High dividend yield stocks are the preferred choice for income-focused retirees seeking stable monthly cash flow.
- A sudden spike in dividend yield often occurs because the stock price has fallen, which can be a signal of underlying corporate trouble.