What does the dividend yield indicate about a company's stock?

The dividend yield is a financial metric that measures the annual dividend payments made by a company to its shareholders relative to its current stock price. This indicates how much income an investor can expect to earn from owning a share of the company's stock, expressed as a percentage of the stock's price.

Investors use dividend yield as a way to assess the attractiveness of a stock in terms of income generation. A higher yield may suggest a more attractive income opportunity, whereas a lower yield may indicate lower dividend distributions or a higher stock price relative to dividends.

By comparing the annual dividends paid to the share price, investors can gauge the return on their investment from dividends alone, providing insight into the company's financial health and its capacity to return profits to shareholders.