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Glossary · Stock basics

Dividend yield

Yearly cash dividends per share divided by the share price.

Why it matters

Dividends are profits paid out to owners. A steady, covered dividend is a sign of a mature, cash rich business. A very high yield can be a warning that the market doubts it will last.

How to read it

Check the payout ratio: paying out more than the company earns can’t last.

Related

Free cash flowCash from operations minus what the company spends on equipment and buildings.BuybacksA company buying its own shares, so each remaining share owns more of the business.

In the Cluenex app, this explanation opens next to every dividend yield figure, with the live reading for the stock you are looking at. Open it in Cluenex