Dividend Yield

Dividend yield is a financial ratio that shows how much a company pays in dividends each year relative to its stock price. It is expressed as a percentage. For example, if a stock costs $100 and pays $4 in annual dividends, the dividend yield is 4%. This metric helps investors understand the return they can expect from dividends alone, making it useful for comparing income-generating investments. A higher yield might indicate a better income opportunity, but it could also suggest higher risk or an unsustainable payout, so it’s important to consider it alongside other factors.