What ratio is calculated as annual dividends per share divided by price per share?

What ratio is calculated as annual dividends per share divided by price per share? The dividend yield measures a share’s annual dividend income relative to its current price.

The formula is annualised dividend per share divided by the current share price, usually expressed as a percentage. For example, a share paying $1 annually and priced at $20 has a 5% yield. Investors use the measure to compare cash income across dividend-paying shares and funds.

Dividend yield does not measure total return: it excludes gains or losses caused by changes in the share price. A rising yield may mean dividends increased, but it can also mean the share price fell because investors expect weaker results or a dividend cut. That is why an unusually high yield can be a warning rather than a bargain.

Reported figures also depend on convention. A trailing yield uses dividends paid over the previous 12 months; a forward or indicated yield estimates the coming year, often by annualising the latest regular payment. The dividend payout ratio is different: it compares dividends with earnings, not with market price.