What is dividend yield?
Dividend yield is the yearly dividend per share divided by the share price. If the share costs 200 and pays 6 a year, the yield is 3%. The number shows what you get paid out each year relative to what you pay for the share.
How to read it
- 0%: The company pays no dividend. Normal for growth companies that reinvest everything.
- 1–2%: Low — typical for companies still growing a fair bit.
- 2–4%: Typical for solid, mature companies.
- 5–8%: High. Check whether the company actually earns enough to keep it up.
- Above ~15%: Almost always a rear-view figure (see below).
The rear-view trap
Dividend yield is calculated on last year's dividend and today's price. If the price has fallen 60% because the company is in trouble, the yield suddenly looks fantastic — but the dividend it is based on will probably never be paid again. The party is already over. The higher the number, the more sceptical you should be.
Tax (Denmark)
In Denmark dividends are taxed as share income: 27% up to DKK 79,400 (2026), 42% above. A 4% yield is thus about 2.9% after tax in the lower bracket. On an aktiesparekonto the rate is 17%.
The typical beginner's mistake
Sorting stocks by dividend yield and buying the top of the list. The top is full of companies whose price has collapsed. What you are looking for is a dividend that has been paid steadily for many years — not the highest number today.
How you see it in Kiggo
Under "Show key figures", Kiggo writes what percent of the share price the company pays out per year — and warns directly if the figure is extremely high: "such high percentages are almost always rear-view figures from before a price fall". If the company pays nothing, Kiggo explains that this is often perfectly fine.
Related terms
Frequently asked questions
What is a good dividend yield?
2–4% from a company that has paid steadily for many years is what most dividend investors look for. Much higher numbers need an explanation — and the explanation is often a price fall.
Does the yield rise if the price falls?
Yes, automatically — same dividend divided by a lower price. That is why a suddenly high number is a warning sign rather than an offer.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-07.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
