What is Dividend yield?

Dividend yield is a financial ratio that measures the amount of dividends that a company pays to its shareholders relative to the market value of its stock. It is calculated by dividing the annual dividend per share by the market price per share and expressing the result as a percentage. For example, if a company pays an annual dividend of $1 per share and the market price of the stock is $50 per share, the dividend yield would be 2%.

Dividend yield can be an important consideration for investors, as it reflects the amount of income they can expect to receive from their investments in the form of dividends. A higher dividend yield may be more attractive to income-oriented investors, while a lower dividend yield may be more appealing to growth-oriented investors who are more interested in the potential appreciation of the stock price.