Dividend and Yield Calculator
Calculate your investment returns and annual passive income.
How to Use the Dividend and Yield Calculator
Understanding your dividend yield is crucial for income-focused investors. This calculator helps you determine how much cash flow your portfolio generates relative to its market value. By inputting just a few figures, you can forecast your monthly income and see the impact of taxes on your take-home returns.
What is 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. For example, if a stock is trading at $100 and pays an annual dividend of $5, the yield is 5%.
Dividend Yield = (Annual Dividend Per Share / Current Stock Price) × 100
Example Calculation
Imagine you own 250 shares of "Blue Chip Corp."
- Stock Price: $80.00
- Annual Dividend: $3.20 per share
- Tax Rate: 15%
Step 1: Calculate Yield. ($3.20 / $80.00) = 0.04 or 4% yield.
Step 2: Annual Gross Income. 250 shares × $3.20 = $800.00 per year.
Step 3: After-Tax Income. $800.00 – 15% tax ($120) = $680.00 Net Income.
Why Dividend Yield Matters
Investors use dividend yield to compare the income potential of different stocks. While a high yield can be attractive, it is important to analyze whether the company can sustain its payouts. A yield that is "too high" (e.g., over 10%) might indicate that the stock price has dropped due to financial trouble, putting the dividend at risk of being cut.
Frequently Asked Questions
What is a good dividend yield? Generally, a yield between 2% and 5% is considered healthy and sustainable for most large-cap companies. Anything higher requires deeper research into the company's payout ratio.
How often are dividends paid? Most US companies pay quarterly (every 3 months), though some pay monthly or semi-annually.