Dividend Yield
Dividend yield is annual dividends divided by the current price, shown as a percentage.
Why this matters
Yield helps compare income potential, but very high yield can also signal higher risk.
Simple example
If a stock pays $2 yearly and costs $50, the dividend yield is 4%.
Common mistakes
- Choosing investments only by the highest yield.
- Ignoring whether the dividend is sustainable.
- Forgetting that price drops can make yield look artificially high.