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 represents the return on investment from dividends alone.

2. How Does the Calculator Work?

The calculator uses the dividend yield formula:

Where:

• \( Annual\ Dividend \) — Total dividends paid per share annually (USD)
• \( Stock\ Price \) — Current price of one share (USD)

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

3. Importance of Dividend Yield

Details: Dividend yield helps investors evaluate income-generating potential of stocks. Higher yields may indicate good income opportunities but could also signal potential risks if unsustainable.

4. Using the Calculator

Tips: Enter the total 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: Typically 2-6% is considered good, but this varies by industry. Extremely high yields (>10%) may be unsustainable.

Q2: Does dividend yield change?
A: Yes, it changes with both dividend amounts and stock price fluctuations.

Q3: Is higher yield always better?
A: Not necessarily. Very high yields might indicate financial trouble or an impending dividend cut.

Q4: How often are dividends paid?
A: Most commonly quarterly, but some companies pay monthly, semi-annually, or annually.

Q5: Should I only consider yield when investing?
A: No, also consider dividend growth, payout ratio, company fundamentals, and your investment goals.