The formula
Dividend yield is the cash dividends per share for a year, divided by the share price, times 100. The result is a percentage: if you bought at this price and the dividends stayed the same, how much cash you would receive per year.
The yield moves with the price
So there are two different numbers. The yield on today's price is what you use to compare stocks now. The yield on your own purchase price tells you what percentage your money earns. If you bought at 16, the 1.20 is 7.5% on your money, even if the yield at today's price is 5%.
A high yield needs a question
The yield you see is usually based on past dividends, and nobody guarantees they repeat. A yield can rise for two very different reasons: the company raised its dividend, or the price fell. Sometimes a payout is one-off, from selling an asset for example, so the yield looks large for one year and then disappears.
Compare yields across stocks
Open the dividend stocks page, pick two stocks with different yields, and check: did the yield come from a higher dividend or a lower price?
Check yourself
1. A share at EGP 40 paid EGP 2 in the year. What is the yield?
2. The dividend is unchanged and the price fell. What happens to the yield at today's price?
Summary
- Yield = dividends per share for the year ÷ price × 100.
- The yield changes with every price move, even if the dividend does not.
- A high yield can come from a fallen price or a one-off payout, so ask where it came from.