Free calculator
Dividend Yield Calculator
Work out a stock's dividend yield, your personal yield on cost, and the payout ratio that tells you whether the dividend is likely to survive.
Dividend yield
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Enter a price and dividend.
- Annual dividend
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- Yield on cost
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- Payout ratio
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- Your annual income
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- Per payment
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The formula
Dividend yield = (Annual dividend per share ÷ Share price) × 100
A stock paying $0.60 quarterly pays $2.40 a year. At $60 a share that is a 4% yield. Note what drives it: the yield changes every time the price moves, even when the dividend itself has not changed at all.
Why a high yield is often a warning
Because price is the denominator, a falling share price mechanically pushes the yield up. A stock that halves while maintaining its dividend doubles its apparent yield, and nothing good has happened.
| Yield | Usually means | What to check |
|---|---|---|
| 0–2% | Growth company reinvesting profits | Is the earnings growth real? |
| 2–5% | Established, mature business | Payout ratio and dividend history |
| 5–7% | Slow growth, or the market is worried | Why is the price depressed? |
| Over 7% | Frequently a dividend at risk | Payout ratio, debt, free cash flow |
Payout ratio: is the dividend affordable?
Payout ratio = (Dividend per share ÷ Earnings per share) × 100
- Under 60%: comfortable, with room to keep paying through a weak year.
- 60–90%: tight. Little margin for an earnings decline.
- Over 100%: the company is paying out more than it earns, funded from reserves or borrowing. Not sustainable indefinitely.
REITs and utilities routinely run high payout ratios for structural reasons, so compare a company against its own sector rather than against the whole market.
To project income over time with reinvestment, use the dividend calculator. To work out what a position cost you, use the stock average calculator.
Frequently asked questions
How do you calculate dividend yield?
Divide the annual dividend per share by the current share price, then multiply by 100. A stock paying $2.40 a year at $60 a share yields 4%. The figure moves whenever the price moves, so a yield that looks unusually high is often the result of a falling price rather than a rising dividend.
What is a good dividend yield?
For established dividend payers, roughly 2% to 5% is a normal range. Below 2% usually means a growth company reinvesting its profits. Above 6% deserves investigation rather than excitement, because it frequently signals that the market expects the dividend to be cut.
What is yield on cost?
Yield on cost divides the current annual dividend by what you originally paid, rather than by the current price. If you bought at $30 and the dividend has grown to $2.40, your yield on cost is 8% even though a new buyer today would receive 4%. It measures your personal income return, not the current attractiveness of the stock.
What is the payout ratio and why does it matter?
The payout ratio is the share of earnings paid out as dividends. Below about 60% generally leaves room for the dividend to survive a bad year. Above 100% means the company is paying out more than it earns, which can only continue by borrowing or draining cash, and is a common precursor to a cut.
Does a high dividend yield mean a good investment?
Not by itself. Because yield is dividend divided by price, a collapsing share price mechanically produces a high yield. This is known as a yield trap: the headline number looks generous right up until the dividend is cut and the price falls further. Always check whether the yield rose because the dividend grew or because the price fell.