ATLASDividend yield
Investing glossary · Valuation and fundamentals
The dividends a company pays in a year, as a percentage of its current share price.
Definition
Dividend yield expresses the cash dividends a company pays per share over a year as a percentage of today's share price. A stock priced at 100 that pays 3 per year has a 3% yield. It is the income part of the return from holding a stock, on top of any change in the price.
Yield moves with the price: if the price falls and the dividend stays the same, the yield rises, which can make a troubled company look generous. A very high yield is often a warning that the market expects a dividend cut. What matters is whether the dividend is covered by earnings and free cash flow.
Formula
Dividend yield = annual dividend per share ÷ share price
Annual dividend per share is the sum of the dividends paid over the last 12 months (or the current annualized rate).
Worked example
Coca-Cola (KO) has a dividend yield of 2.28% at its price of $92.20. That works out to about $2.10 per share per year, or roughly $22.78 of dividends for every 1,000 invested, before taxes.
Check whether free cash flow comfortably covers the dividend before treating the yield as dependable income.
How ATLAS uses it
ATLAS shows the dividend yield in the key numbers of a stock page, and only for companies that pay one.
Related in ATLAS: Financials →Browse all ATLAS tools →See it on a real stock
The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
Is a higher dividend yield better?
Not necessarily. A yield that is high because the price has collapsed can signal risk. Look at the payout relative to earnings and free cash flow, and at whether it has been maintained over time.
Are dividends included in the share price return?
No. The price return excludes dividends. Total return adds the dividends received, usually assuming they are reinvested.
Related terms
Put the idea to work on your own stocks
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Try ATLAS →Not investment advice. ATLAS estimates are produced by statistical models from public data; they can be wrong and past performance does not predict future results. Consider your own situation before investing. Disclaimer