2026-08-04

What Is a Good Dividend Yield?

There is no single “good” yield. Whether 3% is excellent or a 9% yield is a trap depends entirely on why the yield is what it is.

Rough ranges

• 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 test that matters

Instead of chasing a number, ask three questions:

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

Run the numbers with the payout ratio calculator and the dividend growth calculator to judge a yield on fundamentals, not on the headline number.

Related articles

• What Is Dividend Yield and How to Calculate It
• How Dividend Reinvestment (DRIP) Works

Try the dividend calculator or browse all dividend articles. Educational only — not financial advice.