Dividend yield

• The dividend yield is a percentage measure that determines the annual rate of return based on the dividend payout and the market price. Divide the annual dividends by the market price and you have the dividend yield.
  
  

Yields can vary

• The yield on a stock that pays dividends is dependent on its current market price.
  
  

Lower price/higher yield

• If the dividends payable on an annual basis remain the same but you buy the stock at a lower market price, your annual yield will be higher.
  
  

Higher price/lower yield

• If the market price of a high yield stock rises but the dividends remain the same, investors who purchase the stock at the higher market price will receive a lower annual yield.
  
  

Considerations

• A stock is characterized as high yield based on its relative annual rate of return compared to other stocks as well as other fixed-income investments such as bonds or certificates of deposit.