1. What is Dividend Yield?

Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It's expressed as a percentage and is a key metric for income investors.

2. How Does the Calculator Work?

The calculator uses the Dividend Yield formula:

Where:

• \( \text{Annual Dividend} \) — Total dividends paid per share annually (in dollars)
• \( \text{Stock Price} \) — Current price of one share of the stock (in dollars)

Explanation: The formula calculates what percentage return an investor can expect from dividends alone, based on the current stock price.

3. Importance of Dividend Yield

Details: Dividend yield helps investors compare income potential across different stocks. High-yield stocks are often sought after by income-focused investors, though very high yields may indicate risk.

4. Using the Calculator

Tips: Enter the annual dividend per share (sum of all dividends paid in a year) and the current stock price. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good dividend yield?
A: Typically 2-6% is considered good, but this varies by industry. Yields above 10% may be unsustainable.

Q2: Does a higher yield always mean a better investment?
A: Not necessarily. Very high yields might indicate a distressed company or an impending dividend cut.

Q3: How often is dividend yield calculated?
A: It's dynamic - changes with both dividend amounts and stock price fluctuations.

Q4: Should I only consider dividend yield when investing?
A: No, also consider dividend growth, payout ratio, and company fundamentals.

Q5: How does dividend yield compare to bond yields?
A: Unlike bonds, dividend yields aren't guaranteed and can change, but stocks offer growth potential.