Dividend yield

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 Formula Equation

Dividend yield is a term normally used in financial management, business economics and financial reporting. Explore our learning zone to discover more