The dividend yield is a financial ratio that shows how much a company returns to its shareholders in the form of dividends each year. It’s calculated by dividing the annual dividend payment by the market price per share of the company’s stock. A higher dividend yield indicates that the company is distributing a relatively high amount of dividends compared to its market share price, which can be attractive to investors seeking current income. However, it’s crucial to remember that a high yield may also suggest the company is facing difficulties and is trying to maintain its stock price by paying out more dividends. Therefore, while the dividend yield can be an essential indicator of income potential, it should not be the sole metric used to evaluate investment decisions.