Income
Dividend Yield
Definition
The annual dividend payment divided by the stock price, expressed as a percentage. A stock trading at $100 with a $3 annual dividend has a 3% dividend yield. Higher yields can indicate value or risk.
Related Terms
Dividend
A distribution of a company's earnings to shareholders, typically paid quarterly. Dividends provide regular income and are a sign of financial health. The average S&P 500 dividend yield is around 1.5-2%.
Yield
The income return on an investment, expressed as a percentage. For bonds, yield is the annual interest relative to price. For stocks, it refers to the dividend yield. Yield and price move inversely for bonds.
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