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. It's expressed as a percentage and helps investors evaluate the income potential of dividend-paying stocks.
The Dividend Yield Formula
Dividend Yield = (Annual Dividend Per Share / Stock Price) x 100
For example, if a stock pays $2.00 in annual dividends and trades at $50, its dividend yield is 4%.
How to Use This Calculator
- Enter the current stock price
- Select how the dividend is expressed (annual, quarterly, or monthly)
- Enter the dividend amount
- Optionally enter shares owned or investment amount to see income projections
- Click "Calculate" to see results
Understanding Dividend Yield
- High Yield (5%+): Could indicate value opportunity or potential risk
- Moderate Yield (2-5%): Common for established dividend stocks
- Low Yield (0-2%): Often growth-focused companies
Important Considerations
- High yields may signal a declining stock price or unsustainable dividend
- Consider dividend growth rate, not just current yield
- Payout ratio indicates dividend sustainability
- Dividend aristocrats have increased dividends for 25+ years
- Qualified dividends receive favorable tax treatment
Dividend Income Strategies
- DRIP: Dividend Reinvestment Plans compound your returns
- Income Focus: Target stocks with reliable, high dividends
- Growth Focus: Target companies growing their dividends
