Dividend Yield

A dividend is a regular cash payment a company makes to shareholders from its profits. Yield converts that payment into a percentage so investors can compare it against other income sources — like bond interest rates — regardless of the raw share price. Suppose a company pays $2.00 per share annually and its shares trade at $40. The dividend yield would be 5% ($2 ÷ $40). You can see live yield figures across global shares.

Yield and price move in opposite directions. If the share price rises but the dividend payment stays the same, the yield falls; if the price drops, the yield rises. This means a very high yield can be a warning sign rather than a reward — it may signal that the share price has fallen sharply, possibly because the market doubts the company can sustain future payments. Analysts call this a "yield trap."

Context matters enormously when reading yield figures. Utility companies and real-estate investment trusts (REITs) historically pay higher dividends than technology companies, so comparing yields across sectors without that context is misleading. Traders typically also watch yield relative to prevailing interest rates — when risk-free rates rise, a dividend yield that once looked attractive may look less compelling by comparison. See how to read percentage moves for more on interpreting percentage-based figures.