dividend yield

Annual dividends per share divided by price per share. Annual dividends are usually calculated using the indicated dividend—the most recent quarterly dividend multiplied by four. Dividend yield shows, in percentage form, how much income can be expected relative to the current stock price. If a stock’s price rises much faster than its dividend, the yield will fall to a level indicative of a price having been bid up too far. This, in turn, can suggest that the stock is ready for a decline. Conversely, if the dividend yield rises to a historically high level, the stock may be poised for a run-up in price, provided the dividend is considered sustainable. The dividend yield plus capital gains percentage equals total return.