Glossary · Stocks and markets
Dividend yield
The dividend yield is a stock’s yearly dividends divided by its share price: the cash return you get from dividends, as a percent.
Also called: yield, trailing dividend yield
Last 12 months’ dividends ÷ price, Jun 2026. Average since 1871: 4.2%.
November 10, 2026, for comparison.
In plain words
A lemonade stand you could buy for $1,000 pays its owner $50 a year from the till. That is a 5% dividend yield: $50 ÷ $1,000. For a stock it works the same way: the dividends paid over a year, divided by today’s share price.
Because the price is the bottom of the fraction, the yield moves whenever the price moves. A share paying $2 a year yields 4% at $50; if the price falls to $40, the same $2 is a 5% yield; if it rises to $80, only 2.5%.
For the whole S&P 500 the yield is 1.10% now, against an average of 4.2% since 1871.
Example
The yield on the price you pay
- A company pays $0.75 a quarter: $3 a year. Its shares cost $60. Yield: $3 ÷ $60 = 5%.
- You buy 50 shares for $3,000 and receive $150 a year in dividends.
- The price climbs to $100 while the dividend stays at $3. A new buyer now gets only 3%; you still get $150 a year, 5% on what you paid.
- If the company raises the dividend to $4, the yield at $100 becomes 4%.
The yield you see quoted is for someone buying today, at today’s price.
One level deeper
Most websites quote the trailing yield: dividends of the last 12 months over today’s price. A forward yield uses the dividends expected over the next 12 months. A one-off special dividend can make a trailing yield look misleadingly high.
Investors compare the dividend yield with the yield on bonds. Until 1958, US stocks usually yielded more than long-term government bonds; since then it has happened only in the years of very low interest rates from late 2008. In Jun 2026 the S&P 500’s yield was 3.4 percentage points below the 10-year rate. It was last above it in Aug 2021.
Yields are lower than in the past partly because many companies now return cash through buybacks instead of dividends, and partly because share prices rose faster than payouts. The share of profit paid out is the payout ratio; a high yield with a payout ratio above 100% is a warning sign.
Dividend yield against the 10-year bond rate since 1871
For almost a century, US stocks paid more in dividends than government bonds paid in interest: investors wanted extra income for the extra risk. Since the late 1950s bond rates have mostly been higher, as investors came to count on dividends that grow while bond interest stays fixed. Stocks yielded more in 59% of the months since 1871.
The numbers behind the chart
| Date | S&P 500 dividend yield | 10-year Treasury rate |
|---|---|---|
| Jan 1871 | 5.9% | 5.3% |
| Dec 1880 | 4.5% | 3.7% |
| Dec 1890 | 4.8% | 3.6% |
| Dec 1900 | 4.4% | 3.1% |
| Dec 1910 | 5.2% | 4.0% |
| Dec 1920 | 7.5% | 5.1% |
| Dec 1930 | 6.3% | 3.3% |
| Dec 1940 | 6.4% | 2.0% |
| Dec 1950 | 7.4% | 2.5% |
| Dec 1960 | 3.4% | 3.8% |
| Dec 1970 | 3.5% | 6.4% |
| Dec 1980 | 4.6% | 12.8% |
| Dec 1990 | 3.7% | 8.1% |
| Dec 2000 | 1.2% | 5.2% |
| Dec 2010 | 1.8% | 3.3% |
| Dec 2020 | 1.6% | 0.9% |
| Dec 2022 | 1.7% | 3.6% |
| Dec 2023 | 1.5% | 4.0% |
| Dec 2024 | 1.2% | 4.4% |
| Dec 2025 | 1.2% | 4.1% |
| Jun 2026 | 1.1% | 4.5% |
Why it matters
It tells you how much cash a stock pays you while you hold it, without selling anything, which matters most to people living off their savings.
For a whole market, a low yield means prices are high compared with payouts; in the past that has tended to go with lower returns in the following years, though it says little about the next one.
Set against bond yields, it shows how much current income you give up, or gain, by owning stocks instead of bonds.
A common mistake
Myth: A 10% dividend yield means a 10% return.
In fact: Only if the dividend is kept and the price holds. A very high yield often means the price has collapsed because investors expect a cut, and the price can fall by more than the dividends you collect. Your return is dividends plus the change in price: the total return.
Questions people ask
What is a good dividend yield?
There is no single answer: it depends on the company and on interest rates. For the S&P 500 the yield is 1.10% now and has averaged 4.2% since 1871. Mature companies in steady industries often yield more; fast growers often pay nothing.
How do you calculate dividend yield?
Add up the dividends per share paid over the last year and divide by the current share price. $0.50 a quarter is $2 a year; at a $40 share price that is a 5% yield.
Why does the dividend yield go up when the stock price falls?
Because the price is the bottom of the fraction: the company pays the same dollars, and you can now buy them for less. That is why a sudden jump in yield can be a warning rather than a gift.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- US Treasury par yield curve rates: U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates (Interest Rate Statistics).
- S&P Composite (price, dividends, earnings, CAPE), US consumer prices and the 10-year Treasury rate: Robert J. Shiller, Online Data (shillerdata.com).
- This page explains a term. It is not investment advice.