A high-yield stock is a company that pays above-average dividends relative to its share price, providing investors with a steady income stream. The dividend yield—calculated as annual dividends per share divided by the stock price—determines how much cash flow an investor earns relative to their investment.

What Dividend Yield Range Is Considered High?
Moderate Yield: 2%–4% (Common among stable blue-chip stocks like Coca-Cola or Procter & Gamble).

High Yield: 5%–9% (Often seen in sectors like REITs, utilities, and energy stocks).

Very High Yield: 10 %+ (May signal financial distress, unsustainable payouts, or a steep stock price decline).

Key Considerations
Sustainability: A high yield isn’t always good—if the payout ratio exceeds earnings, dividends may be cut.

Sector Trends: REITs and MLPs often have high yields due to tax structures requiring high payouts.

Risk vs. Reward: Extremely high yields (e.g., 15 %+) often come with high risk, such as declining business performance or excessive debt.

Investors should analyze cash flow, debt levels, and dividend history before chasing high yields to avoid "dividend traps" where payouts are unsustainable. A balanced approach, prioritizing both yield and financial health, is key to long-term income investing.