Dividend Yield


The dividend yield is a ratio that shows the percentage of a company's annual dividend compared to its current share price.

How is dividend yield calculated?

Dividend Yield = Annual Dividend/Share Price

Let's say that Company A pay's a $3 annual dividend to its shareholders and their current share price is at $40.

$3/$40 = 7.5% dividend yield.

Why is it important?

The dividend yield can help investors understand potentially how much they could earn from dividends for each share that they own.

Financial Glossary Reference

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