What Is Dividend Yield?
Dividend yield is the yearly dividend as a percentage of the share price. A 3% yield means you get $3 a year for every $100 invested.
How to calculate dividend yield
A share costs $50 and pays $2 a year in dividends. The dividend yield is 4%.
Why the yield changes every day
The dividend usually stays the same for months, but the share price moves daily. When the price drops, the yield goes up. When the price rises, the yield goes down.
What is a good dividend yield?
Many steady dividend companies yield around 2% to 4%. Higher is not always better. A very high yield, like 10%, often means the price fell because investors fear the dividend will be cut.
Check if the dividend is safe
Compare the dividend with profit and free cash flow. If a company pays out more than it earns, the dividend may not last. Heavy debt is another warning sign.
See it in real companies
Open a company to see what it sells and how it makes money.