Dividend Yield
Dividend yield is annual dividends per share divided by price — the income run-rate the market is capitalizing, not a promised return.
Definition
Dividend Yield refers to the income run-rate the market is capitalizing, not a promised return. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Equity risk premia compress or expand with earnings paths and factor regimes. When the income run-rate the market is capitalizing, not a promised return shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what dividend yield is saying. If the income run-rate the market is capitalizing, not a promised return moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Separate index beta from residual; know the sector and factor loadings of the claim. Prefer a short written null hypothesis for Dividend Yield: what would falsify the current reading in the next window?