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Dividend Yield Calculator

Investment Analysis Results:

Dividend Yield: 0.00%

Estimated Annual Income: $0.00

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How to Use the Dividend Yield Calculator

A dividend yield is a financial ratio that tells you how much a company pays out in dividends each year relative to its stock price. This calculator helps investors evaluate the income potential of their stock holdings.

Understanding the Formula

The calculation is straightforward but essential for income-focused portfolios:

Dividend Yield = (Annual Dividend per Share / Current Share Price) × 100

Why Dividend Yield Matters

Dividend yield is a key metric for "Value" and "Income" investors. It provides a way to compare the income-generating potential of different stocks. For example, if Stock A is $100 and pays a $5 dividend, its yield is 5%. If Stock B is $50 and pays a $2 dividend, its yield is 4%. Even though Stock A's dividend is higher in dollar terms, Stock B might be more attractive if you are strictly looking for yield relative to capital invested.

Real-World Example

Let's say you are looking at Coca-Cola (KO). If the stock price is currently $60.00 and they pay an annual dividend of $1.84 per share:

  • Share Price: $60.00
  • Annual Dividend: $1.84
  • Calculation: (1.84 / 60.00) * 100 = 3.07%

If you own 100 shares, you would receive $184.00 in passive income every year.

Key Considerations

  • Yield vs. Growth: Very high yields (e.g., over 8-10%) can sometimes be a "dividend trap," indicating that the stock price has fallen because the market expects the company to cut its dividend.
  • Payout Ratio: Always check the payout ratio alongside the yield to ensure the company can afford its dividend payments.
  • Ex-Dividend Date: To receive the dividend, you must own the stock before the ex-dividend date.

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