The ratio between the ANNUAL dividend a company pays to its shareholders and it’s current share price. Typically companies will pay quarterly dividends, the annual dividend is the sum of all four quarters. Additionally, some companies pay monthly dividends, in which case the annual dividend will be the sum of all twelve months.
Microsoft (MSFT) currently pays a quarterly dividend of $.20 per share, which comes out to be an annual dividend of $.80. As of today MSFT’s share price is $29.62. Therefore, MSFT’s current dividend yield is going to be 2.7%