What is Dividend Yield?
Dividend yield is a financial ratio used to measure the cash return investors receive from owning a share of stock It is calculated by dividing a stock's annual dividend by the current market price per share. This ratio helps investors determine if a stock is offering an attractive value in terms of dividend payouts. It helps investors identify dividend-paying stocks that have the potential to generate a good return.
An elevated dividend yield can be a sign of a stock that is currently undervalued or may carry a greater risk of being cut in the future. Some investors may choose to pursue higher-risk investments with higher yields, while others may prefer to adopt a more conservative approach and seek out lower yielding stocks.
The 5 Best Examples of Dividend Yield
1. Microsoft (MSFT): Microsoft currently yields around 1.80%, which is above its 1-year and 5-year average. Microsoft is a technology giant, and its stock has steadily risen in recent years, making it a solid choice for investors who are after a reliable return.
2. S&P 500 Index: The S&P 500 has a current dividend yield of 1.80%. This diversified index reflects the performance of the largest publicly traded companies in the U.S., and it offers a good level of exposure to the U.S. stock market.
3. Apple (AAPL): Apple’s current dividend yield stands at 0.79%. Apple is one of the most popular stocks on the market, and its dividend yield has held steady over the past few years.
4. AT&T (T): AT&T has a dividend yield of 6.54%. This is an attractive yield for investors who are seeking a reliable income stream from a large-cap stock.
5. Cisco Systems (CSCO): Cisco currently yields around 3.38%. Cisco offers a solid yield for a tech stock and has consistently increased its dividend payouts since 2009.