Dividend Yield Calculator

What this calculator tells you

The dividend yield of a share shows the yearly dividend it pays as a percentage of its price. It is a common measure of the income a share provides. This calculator finds the yield from the share price and the annual dividend, and the yearly income from a holding of a given number of shares.

Yield is a snapshot. It depends on the current price, so if the price rises while the dividend stays the same, the yield falls, and if the price falls, the yield rises. A high yield is not automatically a good sign, because it can reflect a falling share price or a dividend that may not last.

How the yield is worked out

The dividend yield equals the annual dividend per share divided by the share price, multiplied by 100. The yearly dividend income from a holding equals the number of shares multiplied by the annual dividend per share. Dividends are often paid in quarterly or half-yearly instalments, so the annual figure is the total of those payments over a year.

A worked example

Suppose a share costs 50 and pays a total dividend of 2 per share over a year. The yield is 2 divided by 50, which is 0.04, or 4%. If you hold 300 shares, the yearly dividend income is 300 multiplied by 2, which is 600, before any tax is deducted.

Reading the yield with care

The yield should be read alongside the company's ability to keep paying. A dividend larger than the profit that supports it may be cut, and the yield then falls sharply. Look at how much of the profit or cash flow is paid out, how stable the dividend has been, and whether the company has the funds to maintain it. A very high yield relative to others in the same sector can be a warning sign rather than a bargain.

Compare yields within a similar group of companies. Different industries pay out different shares of their profit, so a yield that looks high in one sector may be normal in another.

Limits of the calculation

The calculator uses the annual dividend you enter, which may be a forecast or a past figure. Dividends are not guaranteed, and companies can reduce or suspend them at any time. The result is before tax, and dividend tax rules differ by country and by the type of account in which the shares are held.

Dividends are paid out of the company's value. When a dividend is paid, the share price usually falls by a similar amount, so the total return depends on both the income and the change in price. The yield does not show the price change.

Yield and total return

Dividend yield captures only part of the return from a share. The rest comes from the change in the share price over the holding period. A stock with a 6% yield that falls 20% has produced a worse total return than a stock with a 2% yield that rises 10%, so read yield alongside price performance.

Using the result

Use the calculator to estimate the income a holding could produce, and to compare that income with your spending needs. Then check the company's dividend history, its payout ratio and its outlook before relying on the figure. The income is only as reliable as the company that pays it.