Dividend Yield Calculator
Calculate the income return from dividend-paying stocks
Dividend Yield Formulas
Understanding Dividend Yield
Dividend yield shows the percentage return you receive from dividends relative to a stock's price. It's calculated by dividing annual dividends per share by the current stock price. A $50 stock paying $2 annually has a 4% yield.
Yield is a key metric for income investors seeking regular cash flow. Higher yields mean more income per dollar invested, but extremely high yields may signal risk—the company might cut the dividend or the stock price has fallen sharply.
Unlike total return, dividend yield focuses only on income. A stock with 3% yield and 5% price appreciation has 8% total return. Both factors matter for wealth building, but income investors prioritize reliable yield.
Yield Ranges Explained
High Yield (5%+)
Strong income but verify sustainability. May indicate elevated risk or falling price.
Moderate Yield (3-5%)
Solid income with reasonable safety. Common for established dividend payers.
Low Yield (1-3%)
Growth-focused companies. May have strong dividend growth potential.
No Yield (0%)
Growth stocks reinvest all profits. No current income but capital appreciation focus.
Dividend Yield by Sector
| Sector | Typical Yield | Growth Rate | Safety |
|---|---|---|---|
| Utilities | 3-5% | 3-5%/year | Very stable |
| REITs | 4-8% | 2-4%/year | Required payout |
| Consumer Staples | 2-4% | 5-7%/year | Stable |
| Technology | 0-2% | 10%+/year | Growing |
| Financials | 2-4% | 5-10%/year | Cyclical |
Dividend Investing Tips
Check Payout Ratio
Dividends paid ÷ earnings. Below 60% is sustainable for most companies. Above 80% may be at risk.
Dividend History
Look for companies with 10+ years of consistent or growing dividends. Dividend Aristocrats have 25+ years.
Yield Traps
Very high yields (8%+) often precede dividend cuts. Investigate why yield is so high before buying.
DRIP Benefits
Dividend Reinvestment Plans compound returns. Reinvesting builds shares faster, increasing future income.
Frequently Asked Questions
What is a good dividend yield?
For most investors, 2-5% is the sweet spot—enough income without excessive risk. Compare to the S&P 500 yield (~1.5%) and 10-year Treasury (~4%). Higher isn't always better if the dividend is unsustainable.
Why does dividend yield change?
Yield moves inversely with stock price. If a $50 stock paying $2 drops to $40, yield rises from 4% to 5%. The dividend is the same, but the percentage increases. This is why falling stocks often show high yields.
What's yield on cost (YOC)?
YOC calculates yield based on your original purchase price, not current price. If you bought at $40 and it now pays $3, your YOC is 7.5%. Long-term holders often have higher YOC than current yield due to dividend growth.
Are dividends taxed?
Yes. Qualified dividends are taxed at capital gains rates (0-20%). Non-qualified dividends are taxed as ordinary income. Tax-advantaged accounts (IRA, 401k) defer or eliminate dividend taxes.
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