Dividend yield calculator
By Jude Wallis
Dividend yield is the annual dividend per share divided by the share price. A $2 annual dividend on a $41.60 share is 4.81 percent. A $1.50 dividend on a $50 share is 3 percent.
Dividend yield
4.81%
$2.00 of dividends on a $41.60 share.
- Annual dividend
- $2.00
- Price
- $41.60
- Dividend yield
- 4.81%
Put this on a class page: one iframe, free, for Google Sites, Canvas, WordPress or Notion.
On this page
The formula
is the dividend per share over a full year, not one payment. is the current share price.
Annualise the dividend first
Most companies pay quarterly, so the figure printed next to a payment date is one quarter of the year's dividend. Four payments of make the $2 annual dividend used here. Take the quarterly number straight into the fraction and the yield comes out at a quarter of the truth.
Monthly payers need twelve, semiannual payers need two, and a company that has just changed its dividend needs a decision about whether you are measuring the trailing year or the forward run rate. Both are used. Say which one you meant.
A falling price raises the yield
The dividend is the slow-moving part and the price is the fast one. At $41.60 a $2 dividend is , 4.81 percent. Nothing about the company has to improve for that number to rise; the share price only has to fall.
That is why an unusually high yield is a question rather than an answer. Either the market expects the dividend to be cut, or it does not. The ratio cannot tell you which, because it has one price and one payment in it and no view on either.
Yield is not total return
A $50 share paying $1.50 yields 3 percent, and that 3 percent is only the cash part. Whatever the share price does next is the other part, and it is usually larger in both directions. Total return is the sum of the two.
It is also worth separating yield from payout. Yield compares the dividend to the price you pay. Payout compares the dividend to the earnings behind it, which is the question of whether the payment is affordable. The payout ratio calculator answers that one.
What the ratio contains
Dividend yield is one year's cash payment measured against one share price, which makes it directly comparable across companies and against a bond's current yield. Read it as the income half of a return and pair it with a payout ratio to see what supports the payment. This is educational material, not financial advice.
Worked examples
A \$2 dividend on a \$41.60 share
A share trades at $41.60 and pays $2 a year in dividends. What is the dividend yield?
- The annual dividend is $2 per share, from four quarterly payments of .
- Divide by the price: .
- That is 4.81 percent.
The dividend yield is 4.81 percent on a $2 dividend and a $41.60 share price.
A smaller dividend on a higher price
A second share pays $1.50 a year and trades at $50. What is the yield?
- The annual dividend is $1.50 and the price is $50.
- Divide: , which is 3 percent.
The dividend yield is 3 percent. A smaller payment against a higher price gives less income per dollar invested than the $41.60 share.
Using one quarterly payment as the dividend
A quarterly cheque is a quarter of the annual dividend. Putting one payment of on top of a $41.60 price gives 1.2 percent instead of 4.81 percent, and the mistake is invisible because the answer still looks like a plausible yield. Annualise first, then divide.
Common questions
Is a higher dividend yield better?
Not on its own. A high yield can come from a low price, which is the market pricing in a cut rather than offering free income.
Should I use the trailing or forward dividend?
Either, as long as you say which. Trailing uses the last four payments; forward uses the current run rate annualised.
Is this financial advice?
No. It is educational material for the dividend over price identity.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.