Dividend Yield

Dividend yield represents the annual dividend payment as a percentage of the stock price. It tells you how much income you receive per dollar invested. A stock priced at $100 paying $4/year in dividends has a 4% yield.

• High yield (>5%) — May indicate undervaluation or unsustainable payout. Check payout ratio.
• Moderate yield (2-4%) — Typical for mature, stable companies (utilities, consumer staples).
• Low/no yield (<1%) — Common for growth stocks reinvesting all profits.
• Payout ratio — Dividends as % of earnings. Above 80% may be unsustainable.
• Dividend growth — Companies that consistently raise dividends (dividend aristocrats) often outperform.