A dividend yield is:
A)the stock price as a percentage of the dividend
B)the inflation-adjusted dividend payment
C)the dividend as a percentage of the stock price
D)the real rate of interest on the stock

Question

Quizplus · Accepted Answer

Dividend yield is calculated as the dividend per share divided by the stock price per share, expressed as a percentage. Therefore, it represents the portion of a company's earnings that is paid out to shareholders in the form of dividends, relative to the current stock price. Option A is incorrect because it describes a different ratio, known as the dividend payout ratio. Option B is incorrect because it refers to the payment itself, rather than the ratio between payment and stock price. Option D is incorrect because it refers to a different concept altogether, the real interest rate, which is a measure of the return on an investment after accounting for inflation.

A Dividend Yield Is