Dividend yield
What is dividend yield?
Dividend yield is the annual dividend per share divided by the share price. It tells you the current income rate, not whether the dividend is safe.
Dividend yield = Annual dividend per share ÷ Share price
- Written by
- Suggested Investments Research Team
- Content type
- Reference definition
- Published
- 2026-09-13
- Last reviewed
- 2026-09-13
High yield is often a warning
Yield rises when the price falls. An unusually high yield frequently means the market expects the dividend to be cut, so yield alone is a poor screening tool.
Check what funds it
A dividend paid out of free cash flow is more durable than one funded by borrowing or by an unusually good single year.
A worked example
A $2.00 annual dividend on a $50 share price is a 4% yield. If the price halves to $25 with the dividend unchanged, the yield doubles to 8% — a change in price, not in strength.
The mistake people make
Chasing yield. Ranking companies by yield alone reliably surfaces businesses under stress.
How we use it
Dividend Quality is 25% of our Capital Returns Intelligence research lens, judged on history, growth, cuts and coverage — deliberately never on yield alone.
Related terms
Sources and methodology
- EDGAR full-text and structured filing data — U.S. Securities and Exchange CommissionPrimary source
- Intelligent Accumulation methodology — Suggested InvestmentsPrimary source
Keep reading
- Investing Glossary
Every investing term we use, defined once and in plain English — from compounding and drawdown to Form 13F and share dilution.
- Compound interest
Compound interest is growth earned on both your original money and on the growth it has already produced. It is the reason long holding periods matter more th
- Dollar-cost averaging
Dollar-cost averaging means investing a fixed amount on a fixed schedule regardless of price. It removes the need to decide when to invest, and it buys more s
- Free cash flow
Free cash flow is the cash a business has left after paying the costs of running and maintaining itself. It is the cash that can fund dividends, buybacks, deb
- Expense ratio
An expense ratio is the annual percentage of your money a fund keeps to run itself. It is deducted from returns quietly, every year, whether the fund performs
- Maximum drawdown
Maximum drawdown is the largest peak-to-trough fall an investment has suffered over a period. It measures the worst stretch an investor would have had to sit
Educational information only. Nothing here is a recommendation to buy or sell any investment, and no research measurement removes the risk of loss.