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Stock Yield Formula:
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Stock yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is expressed as a percentage and is a key metric for income investors.
The calculator uses the stock yield formula:
Where:
Explanation: The formula calculates the dividend yield as a percentage of the stock price, providing investors with a measure of the income generated from their investment.
Details: Stock yield helps investors compare the income-generating potential of different stocks, assess dividend sustainability, and make informed investment decisions based on income returns.
Tips: Enter the annual dividend per share in dollars and the current stock price per share in dollars. Both values must be positive numbers, with the price greater than zero.
Q1: What is a good stock yield?
A: A good stock yield varies by industry and market conditions. Generally, yields between 2-6% are considered reasonable, but investors should also consider dividend growth and company stability.
Q2: Can stock yield be too high?
A: Yes, extremely high yields may indicate financial distress, an unsustainable dividend policy, or a declining stock price. Investors should investigate the reasons behind unusually high yields.
Q3: How often is stock yield calculated?
A: Stock yield is typically calculated annually based on the most recent dividend and current stock price, but it can be calculated at any time as stock prices fluctuate.
Q4: Does stock yield include capital gains?
A: No, stock yield only measures dividend income. Total return includes both dividend income and capital appreciation.
Q5: How does stock yield compare to bond yield?
A: Stock yield represents dividend income from equity investments, while bond yield represents interest income from debt investments. Stocks generally offer higher growth potential but more volatility than bonds.