Dividend Yield Calculator
Calculate your annual investment return from stock dividends
Annual Dividend Per Share:
Estimated Annual Income:
$0.00
Understanding Dividend Yield
The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is expressed as a percentage and is a primary tool for income investors to evaluate the cash flow they receive from their equity investments.
The Dividend Yield Formula
To calculate the dividend yield manually, you use the following formula:
Example Calculation
Imagine you are looking at a stock currently trading at $100.00 per share. The company pays a quarterly dividend of $0.75.
- Step 1: Calculate Annual Dividend ($0.75 x 4 quarters = $3.00)
- Step 2: Divide by Stock Price ($3.00 / $100.00 = 0.03)
- Step 3: Convert to Percentage (0.03 x 100 = 3%)
In this scenario, your dividend yield is 3%. If you owned 100 shares, your annual passive income would be $300.
Why Does Dividend Yield Matter?
For investors seeking regular income, such as retirees, the yield is often more important than short-term price appreciation. High dividend yields can indicate a mature, profitable company, but they can also signal a "dividend trap" if the stock price has fallen due to financial distress. Generally, a yield between 2% and 5% is considered healthy, while yields above 8% require careful scrutiny of the company's payout ratio and balance sheet.