Dividend Yield Calculator
Calculate the annual percentage return of your stock investments based on dividend payouts.
How to Use the Dividend Yield Calculator
The Dividend Yield Calculator is a fundamental tool for income investors. It measures the cash flow you receive for every dollar invested in a stock. To use this tool, simply enter the total annual dividend paid per share and the current market price of that share.
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. Unlike capital gains, which represent the increase in the stock's value, the dividend yield represents the "income" portion of your total investment return.
The Dividend Yield Formula
The calculation is straightforward:
Realistic Examples
| Company Scenario | Stock Price | Annual Dividend | Dividend Yield |
|---|---|---|---|
| Blue Chip Utility | $50.00 | $2.00 | 4.00% |
| Growth Tech | $150.00 | $0.75 | 0.50% |
| Real Estate Trust (REIT) | $80.00 | $4.80 | 6.00% |
Why Dividend Yield Matters
For investors seeking passive income, the yield is often more important than short-term price fluctuations. A high yield can indicate a mature company that generates significant cash, but be cautious—an exceptionally high yield (often called a "yield trap") might suggest that the stock price has fallen because the company is in financial trouble and may soon cut its dividend.
Key Factors to Consider:
- Yield vs. Growth: High-yield stocks often grow slower than low-yield or no-yield stocks because they are paying out cash rather than reinvesting it.
- Payout Ratio: Check if the company can afford the dividend. A payout ratio over 100% means they are paying out more than they earn.
- Price Inverse Relationship: If a stock price falls and the dividend stays the same, the yield goes up. If the price rises, the yield goes down.