Dividend yield
The dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage. It tells you how much cash income a stock pays relative to what it costs.
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Annual dividend per share ÷ Share price × 100The dividend yield answers a simple question: for every euro (or dollar) you invest in a stock today, how much cash does it pay you back each year in dividends?
How to calculate dividend yield
Divide the annual dividend per share by the current share price:
If a stock trades at €50 and pays €2 in dividends per year, its dividend yield is €2 ÷ €50 = 4%.
Because the share price moves every day, the yield moves too. When the price falls, the yield rises — and vice versa.
What a “good” yield looks like
There is no single right number. A mature, cash-generative business might yield 3–5%; a fast-growing company may pay nothing at all because it reinvests every euro. What matters is whether the dividend is sustainable — covered by profits and, crucially, by free cash flow.
A yield that looks unusually high is a warning to investigate, not an automatic bargain. It often means the market expects the payout to be cut.
Where dividend yield fits in your analysis
Yield is one input, not a verdict. Read it alongside the payout ratio, earnings, and cash flow to judge whether the income is real and durable.
