This refers to the dividend paid on a share as a proportion of the share’s price, the return on investment for a stock.
From a corporate perspective it is the total annual dividend paid as a proportion of the business’s market capitalisation. It is a commonly used financial ratio to assess potential investments in a business. It is calculated by dividing the total dividend paid per year by the price per share, it excludes any capital gains taxes which may be due from the investor.
Dividend yield is a term normally used in financial management, business economics and financial reporting. Explore our learning zone to discover more