How this number is made
Dividend yield is the cash a share pays in a year, divided by the price. It is not total return. A high yield can be a falling price.
- Annual dividends are the last year’s payments or the stated annual rate, and you should know which.
- Price is what you would pay now, not what you once paid. That second one is yield on cost.
Formula
Yield = annual dividend per share ÷ price.
Worked example
With the figures already in the form, dividend yield is 4.00%.
Questions
Are dividends guaranteed?
No. The board can cut them. A yield calculated from last year does not obligate next year.
Does this include buybacks?
No. Buybacks are not dividends.