Dividend Yield Calculator

What the dividend yield calculator does

The dividend yield calculator shows how much income a share pays each year relative to its price. It divides the annual dividend per share by the current share price and expresses the result as a percentage: the cash income you earn for every unit you invest at today's price.

A share can reward you with income or with a rise in its price. For investors living off a portfolio or building passive income, the yield is often the figure they watch most, and it lets you compare income across different shares.

How dividend yield works

A share priced at 50 that pays 2 in dividends yields 4 percent. The same 2 dividend on a share priced at 100 yields 2 percent, because you pay twice as much for the same income.

The company sets the dividend, usually in line with its profits and its policy. The market sets the price, and it moves every day. Because yield divides one by the other, it changes whenever either figure changes, even if the company never alters its payout.

Yield is therefore a snapshot tied to the price you pay. Two investors who buy the same share on different days at different prices lock in different yields on their own money, even though the company pays them the same dividend per unit.

The two inputs

• The annual dividend per share is the total the company is expected to pay over a year for each unit you own. Some companies pay quarterly, some twice a year, and some annually; add the payments together to get the annual figure. Use the forward estimate for a forward yield, or the last year's payments for a trailing yield.
• The share price is what one unit costs today, which gives the yield a new buyer would receive. If you already own the share, you can compare the dividend with the price you originally paid instead, a related measure called yield on cost.

Adjust either input to see the yield if the price fell during a market dip, or if the company raised its payout. A stable business with a modest but reliable yield may suit an income investor better than a share with a spectacular yield that depends on a payout the company cannot afford.

Reading the yield in context

The same 6 percent yield can describe a healthy, cash-generative company sharing its profits generously, or a struggling one whose price has collapsed and whose dividend is about to be cut.

Check whether the dividend is comfortably covered by earnings or whether the company pays out almost everything it makes, and whether the payout has grown steadily or been frozen or cut. A moderate, well-covered, growing dividend is usually worth more over time than a high one on weak foundations.

Compare a share's yield with its own history and with its peers as well. A yield far above a company's usual range, or far above similar businesses, is a reason to ask why before buying.

Yield versus total return

Dividend yield covers only income. Capital growth, whether the share price rises or falls over time, is the other part of your total return.

A share yielding 7 percent that loses 15 percent of its price in a year has delivered a negative total return despite the income. A share yielding 2 percent whose price climbs steadily may reward you far more overall. The most durable income investments tend to combine a reasonable yield with a growing dividend, so both the income and the underlying value increase over time.

Common mistakes

• Chasing the highest number. An unusually high yield often reflects a falling price and a payout at risk.
• Ignoring dividend cover. A dividend that takes almost all of a company's earnings has little margin for a bad year and may be cut.
• Forgetting price changes. Yield says nothing about whether the share price will rise or fall, which can matter far more to your overall result than the income.

Use yield alongside dividend cover, growth history, and the health of the underlying business.

This article is general information only and is not financial advice.

About This Dividend Yield Calculator

Use this dividend yield calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.