Financial ratio analysis - investors' ratios.
Dividend yield measures the income return enjoyed by shareholders on the current market value of their investments.
(The other component of shareholders' total returns being the expected capital growth in the value of their shareholdings.)
It is calculated as:
Dividend per share ÷ Current share price.
Dividend yield can also be calculated as:
Total dividends ÷ Total current market value of equity
giving an identical result.
Dividend per share example
GeeCo's share price is 200p.
Its relevant dividends per share for the dividend yield calculation are 4p.
The dividend yield on this basis is:
4 / 200