Comprehensive Guide
Learn more in our Investing Guide.
How it works
Dividend yield is the income a stock pays expressed as a percentage of its price: the annual dividend divided by the share price. A $3.60 annual dividend on a $120 share is a 3% yield. The calculator then turns that percentage into money you can budget with — multiply the per-share dividend by your shares for the annual income, and divide for the quarterly and monthly figures, since most US payers distribute quarterly and the quarterly number is what actually lands in the account. The crucial subtlety is that yield moves inversely with price. A yield that suddenly spikes is usually a price that collapsed, with the market pricing in a cut — so a very high yield is a warning to check that earnings or free cash flow actually cover the payout, not a free lunch. Long-term holders watch a different number climb: yield on cost, the dividend divided by what they originally paid, which rises every time the company raises its payout even as the quoted yield on today's price stays flat. A zero dividend, finally, is not a failed stock — growth companies reinvest rather than pay out, and the yield simply measures income this position does not currently produce.Formula
Yield = annual dividend / share price x 100 | income = dividend x shares
Tips
- A spiking yield usually means a collapsing price — check the payout is covered before buying.
- Most US payers pay quarterly, so the quarterly figure is what actually lands.
- Yield on cost — dividend over what you paid — is the number long-term holders watch climb.
- A zero dividend is not a failed stock; growth companies reinvest instead of paying out.
- Reinvested dividends compound — the income buys more shares, which pay more income.
Frequently asked questions
What is dividend yield?
The annual dividend a stock pays divided by its current share price, as a percentage. A $3.60 annual dividend on a $120 share is a 3% yield. It measures the income the position produces relative to what it costs.
How do I calculate dividend income?
Multiply the annual dividend per share by the number of shares you own for yearly income; divide by four for quarterly or twelve for monthly. 150 shares paying $3.60 each is $540 a year, or $135 a quarter.
Is a high dividend yield good?
Not automatically. Yield moves inversely with price, so a yield that spikes is often a price that collapsed with the market expecting a cut. Check that earnings or free cash flow cover the payout before trusting a very high yield.
What is yield on cost?
The current annual dividend divided by what you originally paid per share, not today's price. It rises every time the company raises its payout, which is why long-term holders watch it climb even when the quoted yield on the current price stays flat.
Why does a good company pay no dividend?
Because it reinvests profits to grow instead of paying them out. A zero dividend is not a failed stock — growth companies skip payouts deliberately. The yield simply measures income, which such a position does not currently produce.