Dividend Yield

The cash return on your investment.

For income-focused investors, Dividend Yield is the most critical metric. It measures the cash return you get from owning a stock relative to its price, similar to an interest rate on a savings account.

How to Calculate?

Dividend Yield = (Annual Dividend / Share Price) × 100

Warning: The Yield Trap

A higher yield is not always better. Since yield moves inversely to price, a skyrocketing yield (e.g., 10%+) often means the stock price has crashed due to bad news.

Always Check: The Payout Ratio. If a company pays out more than 100% of its earnings as dividends, that dividend is likely to be cut.