Dividends represent payments to shareholders and are expressed as a percentage. The dividend yield shows the annual dividend divided by the stock price.
Dividend Yield Formula:
Dividend Yield = Annual Dividend / Stock Price
Companies that pay dividends tend to be established which a stable history. As the business grows management can pay out a dividend to shareholders as an incentive to hold the stock. Many high growth companies don't pay dividends at all because the have internal projects that they'd rather fund to grow the business.