Dividend yield

Dividend yield is a stock's annual dividend payment expressed as a percentage of its current share price. It tells you the cash return you would receive in a year if the dividend stays the same and the price does not change.

Formula

dividend_yield = annual_dividend_per_share / current_share_price

A stock priced at $100 that pays $3 in dividends per year has a 3% dividend yield. SignalFin uses the trailing twelve-month dividend figure unless a forward estimate is explicitly noted.

How to read it

• 0% – 1% — typical for growth-oriented companies that reinvest earnings rather than pay them out
• 2% – 4% — common range for mature, profitable companies and broad equity index funds
• 4% – 6% — often associated with value sectors (utilities, telecoms, REITs) or slower-growing companies
• > 7% — sometimes a sign of a struggling business. The yield may be high because the price has fallen, not because the dividend has grown

Limitations

• The yield is backward-looking. A high yield based on last year's dividend can collapse if the company cuts its payout.
• Yield rises when price falls. A jump in yield is not always good news. It can reflect a damaged thesis.
• Total return matters more. Dividends are one piece of total return. Capital appreciation typically dominates long-run equity returns.