Dividend Yield

The dividend yield measures the relationship between the current annual dividend and the current market price of the stock.

It is the annual percentage return in dividends received by a shareholder based on the stock’s current price and current dividend. If the company keeps its dividend payout low in order to retain profits in the company for future growth, the dividend yield will be low. If the company is able to invest the retained earnings profitability, the price of the company’s stock should rise, providing return to investors in the form of capital gain rather than in the form of dividends.