Dividend yield is a ratio that indicates the percentage return an investor can expect to receive from dividends on their investment based on the current market share price. It is calculated by dividing the annual dividend per share by the current market price per share. While some investors prioritize high dividend yields for income, companies with high yields often have poor growth prospects and do not reinvest enough earnings back into the business. In the long run, capital appreciation from investing in high growth companies that reinvest earnings can provide both higher overall returns and increasing future dividends compared to focusing solely on current dividend yield. Investors must consider the tradeoff between immediate dividend income versus future capital growth and dividend potential.