https://abs.twimg.com/emoji/v2/... draggable="false" alt="⭐️" title="Mittelgroßer Stern" aria-label="Emoji: Mittelgroßer Stern"> Dividend Yield https://abs.twimg.com/emoji/v2/... draggable="false" alt="⭐️" title="Mittelgroßer Stern" aria-label="Emoji: Mittelgroßer Stern">

A number you commonly see thrown around when discussing Dividend Stocks https://abs.twimg.com/emoji/v2/... draggable="false" alt="☑️" title="Kästchen mit Häkchen" aria-label="Emoji: Kästchen mit Häkchen">

The formula is:

Annual Dividend
———————- X 100%
Price of Stock

Let’s use $T as an example:

Annual Dividend = $2.08
Current Price of stock = ~$30.16

So we have,

$2.08
———- X 100% = 6.90%
$30.16

Note that Dividend Yield is always fluctuating since the current price of the stock varies throughout the dayhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👌🏻" title="Ok hand (heller Hautton)" aria-label="Emoji: Ok hand (heller Hautton)">

What does the Dividend Yield tell ushttps://abs.twimg.com/emoji/v2/... draggable="false" alt="❓" title="Rotes Fragezeichen-Symbol" aria-label="Emoji: Rotes Fragezeichen-Symbol">

Well, to sum it up, it is a metric that shows us how much bang for our buck we are getting in terms of dividend payments

A stock that yield 2% will give us considerably less dividends than $T

So why shouldn’t I just invest in stocks that have high dividendshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="❓" title="Rotes Fragezeichen-Symbol" aria-label="Emoji: Rotes Fragezeichen-Symbol">

In MOST cases (besides REITS), a dividend yield above 5% should be deeply analyzed

A shady company can attract investors with a high dividend yield, fully knowing that they can’t pay it

This is called a yield trap https://abs.twimg.com/emoji/v2/... draggable="false" alt="⚠️" title="Warnsignal" aria-label="Emoji: Warnsignal">

Don’t chase a high yield

It is important to remember that companies are not legally obligated to pay dividends

They can decrease or discontinue their dividends if they choose to...

Instead of solely relying on the dividend yield...

I suggest you have a checklist of different criteria like:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="🔹" title="Kleine blaue Raute" aria-label="Emoji: Kleine blaue Raute">Consecutive years of dividend increases

https://abs.twimg.com/emoji/v2/... draggable="false" alt="🔹" title="Kleine blaue Raute" aria-label="Emoji: Kleine blaue Raute">Payout Ratio

https://abs.twimg.com/emoji/v2/... draggable="false" alt="🔹" title="Kleine blaue Raute" aria-label="Emoji: Kleine blaue Raute">P/E Ratio

And many more

Please do your research when investing...don’t just follow the crowd https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen">https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen">https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen">https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen">