Part 7/9:
The dividend yield—a measure of how much a company pays out in dividends relative to its share price—serves as a guiding metric for potential income generation. To calculate the yield, one can use the formula:
[ \text{Dividend Yield} = \frac{\text{Annual Dividend}}{\text{Stock Price}} ]
While higher yields can be attractive, they may also indicate underlying risks, including a declining stock price or an unsustainable dividend. Therefore, it is vital to evaluate the company's overall financial performance.