Dividend Yield Calculator

The formula

Dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage:

Dividend yield (%) = (annual dividend per share / share price) × 100

When you also enter a share count, two more figures follow directly:

• Annual dividend income = annual dividend per share × number of shares
• Total cost = share price × number of shares

Worked example

Suppose a stock pays a 2.50 annual dividend per share and trades at 50 per share. The yield is:

2.50 / 50 × 100 = 5.00%

If you hold 200 shares, your annual dividend income is 2.50 × 200 = 500, and your position cost is 50 × 200 = 10,000. That 500 of income on 10,000 invested confirms the 5 percent yield from the cash side.

Yield at different prices

The same 2.50 dividend produces a very different yield depending on the price you pay. Buying cheaper raises your yield; chasing a rising price lowers it.

Pitfalls to avoid

• A very high yield can be a warning, not a bargain. Yields above roughly 7-8 percent for an ordinary stock often mean the price has fallen because the market expects a dividend cut.
• Use the forward dividend when you can. Trailing dividends reflect the past; if a company just raised or cut its payout, the headline yield may be stale.
• Yield is not total return. A 3 percent yielder that grows its dividend and price can beat a static 6 percent yielder over time.
• Watch the payout ratio. A dividend that consumes nearly all of earnings has little room to survive a bad year.