Dividend yield measures the cash income you earn annually from holding the stock, expressed as a percentage of the current price. A 4% yield means $4 per year for every $100 invested. Typical ranges: Growth stocks 0-2% (they reinvest earnings), Dividend aristocrats 2-4%, High yield / REITs 4-8%. Watch out for value traps: An abnormally high yield (>8%) often signals distress — either the dividend is about to be cut or the stock has crashed. Payout ratio check: Dividend / Earnings should be <70% for sustainability. A 90% payout ratio with high yield is a red flag — limited margin for safety.