Profitability
Dividend yield
Dividend
What it is
The percentage of the stock price paid out in annual dividends. A 4% dividend yield means that for $100 invested, you receive $4 per year (pre-tax).
How to read it
A stable and growing dividend over long periods signals a mature, profitable, confident company. An abnormally high yield (8-10%) is often a trap — either the price has dropped, or the dividend is about to be cut.
Common reference points
- No dividend (growth)0%
- Moderate1 – 3%
- High3 – 5%
- Very high — verify> 5%
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
In Canada, eligible Canadian dividends benefit from a favorable tax credit. US dividends are taxed differently. Net after-tax yield varies significantly by tax context.
Other measures — Profitability
Educational content. Polaris is not a registered investment adviser and makes no recommendation.