# What is the Dividend Yield?

Definition: The Dividend Yield is a financial ratio for equities. The Dividend Yield shows the level of profit-distributions the company pays on a yearly basis in % of the current share price. With the Dividend Yield the investor is able to compare the dividend of different stocks.

# How to calculate the Dividend Yield?

To our Dividend Yield Calculator

The Dividend Yield is calculated with this easy formula:

dividend payments per share
current share price

Important: if a company pays several dividends in a year you have to sum-up to the total amount of dividends per year. In order to have a up-to-date information about the dividend of a company, banks and brokers often use the expected dividend for the running business year to calculate the Dividend Yield.

## Example:

The NestlĂ© Stock is at 63 Swiss-francs. Analysts expect a dividend of 2.05. What is the Dividend Yield?

2.05 / 63 = 0.0325 = 3.25% Dividend Yield for the NestlĂ© Stock

# Use of the Dividend Yield

With the Dividend Yield the investor can compare the yield of the different dividends companies pay. The dividend is a important source of income for many investors. Therefore investors can chose stocks which pay a high dividend yield. High-Dividend-Stock are favored by income oriented investors and also funds and ETF's are available on stocks which pay a high dividend yield.