Is a 2% dividend yield good?

A 2% yield is normal for large, growing companies — the S&P 500 averages around 1.3%. It is a good yield when the dividend is rising steadily, because a growing 2% yield reinvested can beat a flat high yield over a decade.

Is a 10% dividend yield good?

Usually a warning sign, not an opportunity. A 10% yield usually follows either a collapsed share price or a payout that earnings cannot sustain. Check the payout ratio before treating it as income.

What is a good dividend yield for an ETF?

For a broad dividend ETF, 2% to 4% is typical. High-income funds like covered-call ETFs can yield 10% or more, but that yield can include return of capital and cap the upside, so it is not comparable to a normal stock dividend.

How do you know if a dividend yield is sustainable?

Check three things: the payout ratio (dividend divided by earnings — above 100% is unsustainable), the dividend growth trend (flat or rising beats falling), and why the yield is high (a price collapse is not income).

By the Dividend Payout Calculator editorial team · 2026-08-04 · How we calculate

What Is a Good Dividend Yield?

Q: What is a good dividend yield?

Most dividend investors consider 3% to 5% a good yield: high enough to produce meaningful income, low enough that the payout is usually sustainable. Below 1% you are mostly paying for growth; above 8% the dividend is often at risk of being cut.

A good dividend yield is usually 3% to 5%. Below 1% you are mostly paying for growth; above 8% you are usually buying a problem. But the number alone never decides — a 2% yield growing 10% a year beats a flat 6% yield, and a 10% yield from a falling stock is a loss, not income.

Rough ranges for dividend yields

1–3%: normal for large, growing companies (the S&P 500 averages around 1.3%).
3–5%: solid income — utilities, REITs, quality dividend payers.
5–8%: high. Check the payout ratio and the business model carefully.
8%+: usually a warning. Either the price collapsed or the dividend is unsustainable.

The three tests that matter more than the number

Payout ratio — is the dividend covered by earnings? Above 100% is unsustainable.
Growth — is the dividend rising? A 2% yield growing 10% a year beats a flat 6% yield.
Why is it high? — a yield spike from a falling price is not income, it is a loss.

Run the numbers with the dividend yield calculator, check the payout ratio calculator, and model growth with the dividend growth calculator.

Frequently asked questions

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What Is a Good Dividend Yield?

Rough ranges for dividend yields

The three tests that matter more than the number

Frequently asked questions