Dividend yield
By Jude Wallis
Dividend yield is the annual dividend per share divided by the current share price, written as a percent. It counts cash paid out to shareholders and nothing else.
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Two versions of the number circulate. Trailing dividend yield uses the dividends actually paid over the past year. Forward dividend yield annualises the most recent declared payment. They disagree whenever a company has just changed its payout, and the disagreement is the useful part.
A high yield is often a price story rather than an income story. The denominator falls faster than boards cut dividends, so the yield rises first and the cut arrives second. Checking the payout ratio alongside the yield asks whether earnings can carry the payment at all.
The dividend yield calculator is the division, how dividend yield works is the explainer, and a dividend is the payment being measured. Set next to earnings yield, it shows how much of the profit is reaching shareholders as cash.