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Dividend Yield
Term category: Stocks
In 10 words or less:  The dividend expressed as a percentage of the current stock price.

Definition: The dividend yield is the rate of return an investor would receive solely from dividends.  It's calculated as follows:

Dividend yield = (Annual dividend)/(Current stock price)

Advice: The dividend yield is an interesting figure to keep an eye on because high dividend yields can make stocks very attractive.  However, if the dividend yield is too high (10% or more for non-REIT stocks), you should be wary of it.  The company may need to cut its dividend if its stock price plummets due to poor financial performance.

 

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