Equity · Core
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
Yield = DPS / price (trailing or indicated). A high yield can be a cheap cash return or a price that has already sniffed a cut. Total return is yield plus growth minus multiple change.
Why it matters
Equity-income products and retirement screens sort on it. Yield traps are names where the denominator fell for a fundamental reason.
Case
An energy producer at 12% yield after a commodity collapse. The indicated dividend assumed $90 oil. At $60 the yield was a rumor.
How to read it
Check FCF coverage and the commodity or rate assumption inside the dividend. Compare to earnings yield and to the risk-free rate, not to last year’s yield.
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