What is a dividend and what is dividend yield?

Updated November 15, 2026 · examples use today’s data

A dividend is cash a company pays its shareholders out of its profits, usually every quarter. Dividend yield is the yearly dividend divided by the share price.

A real example

Coca-Cola trades at about $99.25 and its dividend yield is about 2.2%. Invest $1,000 and you would collect about $22 a year in cash. Coca-Cola has paid a dividend for at least 10 straight years in our data.

What makes a dividend safe

A dividend is only as safe as the cash behind it. Check that free cash flow covers the dividend, that the payout ratio (dividends ÷ earnings) is not near or above 100%, and that debt is under control. A very high yield is often a warning: the price has fallen because the market expects a cut.

Dividends vs. buybacks

Buybacks are the other way to return cash. Dividends give you cash you can spend or reinvest; buybacks raise your share of the company without a taxable payment in many countries.

Frequently asked questions

When do I have to own the stock to get the dividend?

Before the ex-dividend date. If you buy on or after that date, the seller keeps the next payment.

Is a 10% dividend yield good?

Rarely. Yields that high usually mean the market doubts the payout. Our dividend list leaves out yields above 12% for that reason.

Tools for this

Best dividend stocks Stock screener

Keep learning

What is the P/E ratio and how do you use it?What is earnings per share (EPS)?What does TTM (trailing twelve months) mean?What is an ETF and how is it different from a stock?What is compound interest and why does it matter so much?What is intrinsic value and how is it calculated?

Educational content, not investment advice. Figures in the examples come from company filings and market prices and update automatically.