Dividend Yield Calculator
Dividend Yield Calculator
A share’s dividend yield at today’s price, the yearly income on your holding, and your yield on cost from the price you paid.
Dividend yield
A share at $1,500 that paid $36 a share over the last 12 months; you hold 100 bought at $1,000
Dividend yield and yield on cost
- yearly dividend
- the total of the last 12 months (trailing), or the last payment × the number of payments a year (annualised)
- price
- today’s share price
- price paid
- what you paid per share, for your own holding
Worked example
A share at $1,500 that paid $36 a share over the last 12 months; you hold 100 bought at $1,000
Yield = 36 ÷ 1,500 × 100 = 2.40%
Income on 100 shares = 36 × 100 = $3,600 a year
Yield on cost = 36 ÷ 1,000 × 100 = 3.60%
If the last payment was $9 and it is paid every quarter: 9 × 4 = 36.0, the same 2.40%
What a dividend yield tells you, and what it does not
The dividend yield is a year’s dividends as a percentage of today’s share price. There are two common ways to count the year. A trailing yield adds up what was actually paid over the last twelve months. An annualised yield takes the last payment and multiplies it by the number of payments a year. The first is a fact about the past, the second an assumption about the future, and both can include a one-off special dividend that will not recur. Many Indian companies pay an interim and a final dividend of different sizes, so annualising a single payment can mislead; the trailing total is usually safer.
Because the price is the denominator, the yield moves when the price moves. The same $36 dividend is 2.40% at $1,500 and 3.60% at $1,000. A yield that looks unusually high often means the price has fallen because the market expects the dividend to be cut. Dividends are paid out of profits (in India, under section 123 of the Companies Act, 2013) and can be reduced or stopped. A dividend yield is also only part of a share’s return; the change in price is the other part, and for many companies the larger one. Yield on cost, the dividend divided by what you paid, is a measure of your own purchase, not a reason to hold or sell.
Tax: in India dividends are taxed as the shareholder’s income, and the company may deduct tax at source above a threshold. Rules differ by country, and this page shows figures before tax. To compare the income with a property’s rent, see the rental yield calculator; to measure a holding’s total return, including the price change, use the ROI calculator or the CAGR calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How is dividend yield calculated?
Yearly dividend per share ÷ share price × 100. $36 a year on a $1,500 share is a yield of 2.40%.
What is yield on cost?
The yearly dividend divided by the price you paid. $36 on shares bought at $1,000 is 3.60%. It rises as a company raises its dividend, but a buyer today earns the current yield, not yours.
Is a high dividend yield good?
Not by itself. A high yield can mean the price has fallen because a dividend cut is expected, or that the last year included a one-off special dividend. Look at whether the company’s profits cover the dividend.
Are dividends taxed?
In India, yes: dividends are taxed as the shareholder’s income and the company may deduct tax at source. Rules differ elsewhere; check the current ones for your country.
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References
- Bodie Z, Kane A, Marcus AJ. Investments. McGraw-Hill. Real and nominal rates of return (the Fisher relation), after-tax returns, dividend yield and total return, and price–earnings ratios.
- Companies Act, 2013 (India), section 123: declaration of dividend out of profits, including interim dividends declared by the board.