Dividend Yield

What is Dividend Yield? — Definition

Dividend yield is calculated as: Annual Dividend per Share / Current Stock Price × 100. It's the most common way to compare income-generating potential across dividend stocks. A $50 stock paying $2.50 annually has a 5% dividend yield.

A high yield isn't always good. Sometimes yields are elevated because the stock price has fallen sharply — a potential sign of financial distress (called a 'yield trap'). Conversely, a growing company that starts paying a 1% dividend may grow that dividend faster than a mature company paying 6%.

Example

AT&T at one point offered a dividend yield near 8%, which looked attractive. But the company eventually cut its dividend significantly when its debt load became unsustainable. Investors chasing the high yield suffered both income cuts and capital losses.

BMInsider's Dividend Calendar displays current and historical yields side by side, helping you identify whether a high yield reflects genuine income potential or a falling stock price that's a red flag.