Quick Definition

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Formula

Examples

• 1A company with a stock price of $100 and an annual dividend of $3 per share has a dividend yield of 3%.
• 2If a company increases its dividend from $1 to $2 while the stock price remains at $50, the dividend yield rises from 2% to 4%.
• 3During a market downturn, if a company's stock price falls from $100 to $50 but maintains a $4 dividend, the yield increases from 4% to 8%.

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