Annual dividend income as a percentage of the stock price. The 2-5% range is ideal for most income investors. Very high yields above 6% may signal a dividend cut is coming, so always check the payout ratio.
Formula
Description
Annual income from dividends as a percentage of the stock price. A key metric for income-oriented value investors. The dividend discount model values stocks entirely based on expected future dividends, making yield a fundamental input.
Interpretation
2-5% is the ideal range for most income investors. Very high yield (above 6%) may signal a dividend cut risk, so always check the payout ratio. Growing dividends over time matter more than a high starting yield.
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