Dividend Yield
Annual dividend payment as a percentage of stock price.
Definition
Dividend yield expresses the annual dividend per share as a percentage of the current stock price. It represents the income return an investor receives from holding the stock, separate from any capital gains. Bank stocks are traditionally known as income investments with above-average yields.
Formula
Dividend Yield = Annual Dividends Per Share / Stock Price × 100
Why It Matters
Dividend yield helps income-focused investors compare return potential across stocks. Very high yields (above 5-6%) may signal the market expects a dividend cut, while steady moderate yields (2-4%) with consistent growth are prized.