Stock Dividend Yield Calculator
Calculate the annual return on investment for your dividend-paying stocks.
What is Dividend Yield?
Dividend yield is a financial ratio that indicates how much a company pays out in dividends each year relative to its stock price. Expressed as a percentage, it is a critical metric for income investors who seek to generate a steady stream of cash flow from their equity portfolios.
The Dividend Yield Formula
The math behind dividend yield is straightforward but powerful. To calculate it, you divide the annual dividends paid per share by the current price per share:
Dividend Yield = (Annual Dividends Per Share / Current Stock Price) × 100
Why Investors Use This Calculator
Investors use the Dividend Yield Calculator to compare different stocks within the same sector or to compare stock yields against other income-generating assets like bonds or real estate. A higher yield may indicate a more attractive income opportunity, but it is essential to analyze the underlying company's health to ensure the dividend is sustainable.
Example Calculation
Imagine you are looking at "Company A" with the following financials:
- Current Share Price: $100.00
- Quarterly Dividend: $1.25
First, calculate the annual dividend: $1.25 × 4 = $5.00. Then, apply the formula:
Yield = ($5.00 / $100.00) × 100 = 5%
Yield vs. Dividend Growth
It is important to distinguish between a "high yield" and "dividend growth." Some companies have a low current yield but increase their dividend payments significantly every year. Others may have a high yield because their stock price has fallen sharply, which could be a warning sign of financial distress (often called a "yield trap").
| Metric | What it Tells You |
|---|---|
| High Yield | High immediate cash flow; potentially lower growth or higher risk. |
| Low Yield | Likely a growth company reinvesting profits or a premium-priced stock. |
| Rising Yield | Either the company increased payouts or the stock price decreased. |