1. What is Dividend Yield?

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It's expressed as a percentage and is a key metric for income investors.

2. How Does the Calculator Work?

The calculator uses the dividend yield formula:

Where:

• \( Dividend \) — Annual dividend per share (in USD)
• \( Price \) — Current stock price (in USD)

Explanation: The formula calculates what percentage of the stock price is returned to investors as dividends each year.

3. Importance of Dividend Yield

Details: Dividend yield helps investors compare income-generating stocks and assess the return on investment from dividends alone, separate from capital gains.

4. Using the Calculator

Tips: Enter the annual dividend per share in USD and the current stock price in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good dividend yield?
A: This depends on market conditions and investor goals. Typically, 2-6% is considered good, but extremely high yields may indicate risk.

Q2: Does dividend yield change?
A: Yes, it changes whenever either the dividend amount or the stock price changes.

Q3: Should I only look at dividend yield?
A: No, also consider dividend growth, payout ratio, and company fundamentals. A high yield with unsustainable dividends isn't ideal.

Q4: How often are dividends paid?
A: Most commonly quarterly, but some pay monthly, semi-annually, or annually. This calculator uses annualized amounts.

Q5: Are dividends guaranteed?
A: No, companies can reduce or eliminate dividends at any time, especially during financial difficulties.