If paid quarterly, multiply the quarterly payment by 4.
Please enter a valid Stock Price and Annual Dividend.
Dividend Yield:0.00%
Total Annual Income:$0.00
Yield on Cost (YOC):0.00%
function calculateDividendYield() {
// Get Input Values
var price = parseFloat(document.getElementById('dy_stockPrice').value);
var dividend = parseFloat(document.getElementById('dy_annualDividend').value);
var shares = parseFloat(document.getElementById('dy_sharesOwned').value);
var cost = parseFloat(document.getElementById('dy_costBasis').value);
var errorDiv = document.getElementById('dy_error');
var resultsDiv = document.getElementById('dy_results');
// Validation: Price and Dividend are required
if (isNaN(price) || price 0) {
yieldOnCost = (dividend / cost) * 100;
} else {
// If no cost basis is provided, YOC is not applicable/displayed as N/A or hidden logic
// For this display, we'll just show 0.00% or equal to current yield if cost == price (but here we just check input)
if (isNaN(cost)) {
yieldOnCost = 0;
}
}
// Update DOM
document.getElementById('res_yield').innerText = yieldPercent.toFixed(2) + '%';
document.getElementById('res_income').innerText = '$' + totalIncome.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var yocElement = document.getElementById('res_yoc');
if (yieldOnCost > 0) {
yocElement.innerText = yieldOnCost.toFixed(2) + '%';
yocElement.parentElement.style.display = 'flex';
} else {
yocElement.innerText = "N/A";
yocElement.parentElement.style.display = 'flex';
}
// Show results
resultsDiv.style.display = 'block';
}
What is Dividend Yield?
Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. For income-focused investors, this is one of the most critical metrics to evaluate the return on investment (ROI) generated specifically from cash distributions, excluding capital appreciation.
Essentially, the dividend yield tells you the percentage return you would earn on your investment if the stock price and dividend payout remained constant for a year.
The Dividend Yield Formula
The calculation for dividend yield is straightforward. It is determined by dividing the annual dividend per share by the current price per share:
Example: Imagine you are looking at a stock that is currently trading at $100.00 per share. The company pays a quarterly dividend of $1.00, which means the annual dividend is $4.00.
Annual Dividend: $4.00
Stock Price: $100.00
Calculation: ($4.00 / $100.00) × 100 = 4.00%
Understanding Yield on Cost (YOC)
While the standard dividend yield is based on the current market price, Yield on Cost (YOC) is based on the price you originally paid for the stock (your cost basis). This metric helps long-term investors understand the actual return on their initial capital.
If you bought the stock mentioned above five years ago when it was trading at $50.00, your Yield on Cost would be much higher than the current market yield:
Annual Dividend: $4.00
Original Cost Basis: $50.00
Yield on Cost: ($4.00 / $50.00) × 100 = 8.00%
Use the "Average Cost per Share" field in the calculator above to determine your personal Yield on Cost.
High Yield vs. Low Yield: What's Better?
A higher dividend yield isn't always better. In fact, an exceptionally high yield can sometimes be a warning sign (often called a "yield trap"). Since yields move inversely to stock prices, a yield might skyrocket simply because the stock price has crashed due to financial trouble.
Low Yield (0.5% – 2%): Often found in high-growth companies or the broader market (S&P 500).
Moderate Yield (2% – 5%): Typical for stable, blue-chip companies, utilities, and REITs.
High Yield (6% +): Can indicate undervalued opportunities or distressed companies at risk of cutting their dividends.
Why Use a Dividend Calculator?
Using a dividend calculator helps investors project their passive income. By inputting the number of shares you own, you can instantly see your Total Annual Income. This is crucial for retirees or those pursuing the FIRE (Financial Independence, Retire Early) movement who rely on dividends to cover living expenses.
Remember that dividends are not guaranteed. Companies can cut or suspend dividends during economic downturns. Always analyze the Payout Ratio (the percentage of earnings paid as dividends) alongside the yield to ensure the dividend is sustainable.