Dividend Rate is simple interest without compounding. For example, $10,000 @ 6.00 Dividend Rate for 2 years will produce $600 of interest per year (or $300 semi-annually, or $150 quarterly, or $50 monthly). APY (Annual Percentage Yield) is compounded interest (usually daily or monthly) calculated for 1 year (even if the term is shorter or longer). For example, $10,000 @ 6.00 Dividend Rate for 2 years compounded monthly, produces a 6.17 APY which returns a total of $11,272.07 after 2 years. Some institutions calculate interest differently - simple interest, daily compounding, monthly compounding, etc.  By law (Truth in Savings) all institutions must quote an APY so that customers can make an "apples to apples" comparison between institutions. For comparison purposes, banks often quote the APY of investments that don't compound interest. This is interpreted as "if the interest were to be compounded, this would be the APY".