Div Yield
The income return from dividends alone. S&P 500 average is ~1.5%. Above 4% is an above-average dividend yield \u2014 check the payout ratio to see if it's sustainable.
Why it matters
Shows the income return you receive just from holding the stock, independent of price appreciation. Dividends represent real cash returned to shareholders.
How to read it
The S&P 500 average is about 1.5%. Above 4% is an above-average dividend yield — check the payout ratio to see if it's sustainable. A yield above 8% often signals the market expects a dividend cut. Look for companies with a long history of raising dividends (Dividend Aristocrats = 25+ years). Dogs of the Dow strategy (buying the 10 highest-yield Dow stocks) returned ~13% annually from 1957-2003. However, yield traps (high yield from falling prices) are a real risk.
Source
Fama & French (1988). "Dividend yields and expected stock returns." Journal of Financial Economics.
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Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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