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The annual dividend payment divided by the stock's current price, expressed as a percentage.
Dividend yield measures the income return on a stock investment. A stock trading at $100 with an annual dividend of $3 has a 3% yield. Higher yields can indicate value or distress, so an unusually high yield should be investigated carefully since it might signal that the market expects a dividend cut. The S&P 500 average dividend yield has historically been around 2%. Dividend yield is a key metric for income-focused investors, particularly retirees who rely on portfolio income.