Dividend yield

Dividend yield is the annual dividend per share divided by the current share price. It captures only the cash-distributed portion of shareholder return and ignores buybacks, retained earnings reinvested at the firm's ROIC, and any capital appreciation. Yield in isolation is a poor signal: an unusually high yield often means the market is pricing in a dividend cut, while a zero yield can be entirely consistent with a high-quality compounder that returns capital exclusively through buybacks. We pair dividend yield with payout ratio, dividend coverage from free cash flow, the trailing five-year dividend growth rate, and the implied total shareholder yield (dividend yield plus net buyback yield). For income-oriented archetypes — utilities, REITs, consumer staples — dividend yield is a primary lens. For everything else, total payout yield is the more honest measure of cash returned per dollar invested.