What is a Dividend Yield?

Too shy to ask about this important investment feature? A dividend yield is a portion of a company’s profits that is paid out to shareholders. Each year, the directors must decide how much of the annual profit will be paid out to shareholders in the form of dividends – usually quarterly – and how much will be retained for growth. the company.

For example, if profits (after taxes) are $100,000 and $50,000 are paid out in cash distributions, the director can only keep $50,000 for growth. This is why some companies grow fast but pay low dividends (usually technology companies) while others pay high dividends but have lower growth (like utilities).


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