Dividend Yield

Dividend yield answers a simple question: for every dollar you invest at the current price, how much annual cash does the company pay you? It's the annual dividend per share divided by the share price. A higher yield means more income per dollar — but, crucially, yield moves inversely to price, so a rising yield can be good news (a bigger payout) or bad news (a falling price).

Yield is best read alongside two things:

• The payout ratio — dividends as a share of earnings. A sustainable yield is backed by earnings; a yield paid out of more than the company earns is fragile. (See dividend investing.)
• Dividend growth — a moderate yield that rises every year often beats a high static yield over time.

An unusually high yield is a red flag, not a bargain signal. It usually means the market has marked the price down because it doubts the dividend will survive — the classic yield trap.

Yield is a core income metric, but it's the most misread number in investing. Chasing the highest yield often means buying troubled companies right before a dividend cut — which hits both the income and the price. Reinvested dividends have historically driven a large share of long-term total return, so a reliable, growing yield compounds; an unreliable high one destroys capital.

Entry Point Trading teaches process and risk, not stock tips — and makes no income or return claims.