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Investing

What is dividend yield?

The meaning

The percentage of an investment’s price that it pays you back in dividends each year. If a stock costs $100 and pays you $5 a year in dividends, its yield is 5%. Higher yield means more income relative to what you paid. Yields can change over time, so they’re never a promise.

Example
$2dividends a year÷$50share price=4%dividend yield
On $10,000, a 4% yield pays about $400 a year, or about $33 a month.
Walk through the numbers

A share costs $50 and pays $2 in dividends over a year. $2 divided by $50 is a 4% dividend yield. On $10,000 invested, that is about $400 a year, or about $33 a month.

Why it matters

Yield lets you compare payouts across investments and estimate what your money could pay. A very high yield can also be a warning sign.

Read: Not All Dividends Are Created Equal →

Related terms

DividendA cash payment a company or fund sends you for owning its shares.YieldThe income an investment pays each year, as a percent of what it costs.REITA company that owns income-producing real estate and pays out most of its profit.StockA small slice of ownership in a company.

See all 34 terms · Read the full glossary

For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.