Dividend yield compares an annual cash dividend per share with a share price. It is a rate at one point in time, not a promised return.
Why yield changes
Yield rises if the annual dividend increases while price stays flat. It also rises if price falls while the dividend stays flat. The second case explains why a very high yield can be a warning instead of a bargain.
Trailing and forward inputs
A trailing annual distribution totals cash paid during a recent 12-month period. A forward figure annualizes a declared regular payment. Special dividends, timing changes, or cuts can make the two measures differ. Label the method and use the same method when comparing securities.
Yield is not total return
Total return combines changes in market value with distributions, usually assuming reinvestment. A 5% distribution yield does not guarantee a 5% profit because the share price can fall and the distribution can change.
Primary sources
Tax rules, fund distributions, security prices, and company finances change. Verify current primary sources and seek qualified advice for your situation.