Dividend Yield Calculator

How dividend yield is calculated

Dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage. A stock trading at $50 with a $2.00 annual dividend per share has a 4.0% yield ($2.00 / $50 = 0.04, or 4%). That's the entire formula, the complexity in dividend yield isn't the math, it's remembering that the number moves whenever the share price moves, even on a day with no dividend news at all. If a stock drops from $50 to $40 with no change to its $2.00 dividend, its yield rises to 5.0%, purely from the price change, the company hasn't become more generous, its shares have simply become cheaper.

This calculator's monthly dividend equivalent figure divides the annual dividend by twelve, a useful reference number even for stocks that don't actually pay monthly, since it gives a consistent per-month figure to compare against a monthly budget or against another position that does pay monthly.

What is yield on cost, and why does it differ from current yield?

Yield on cost uses the exact same formula, annual dividend divided by price, except the price used is what you originally paid for the shares, not today's market price. If you bought a stock years ago at $30 a share and its dividend has since grown to $2.00 a share annually, your yield on cost is 6.67% ($2.00 / $30), even if the stock now trades at $60 and its current yield (what a new buyer would get today) is only 3.33% ($2.00 / $60). Both numbers are correct, they just answer different questions: current yield tells a prospective buyer what they'd earn buying today, yield on cost tells an existing holder what they're actually earning relative to what they originally paid.

Yield on cost tends to rise over time for a holding whose dividend keeps growing, since the denominator (your original cost) is fixed while the numerator (the dividend) increases, this is the mechanism long-term dividend growth investors are often describing when they talk about a position that "pays for itself" after enough years. It is not, however, a measure of how good a deal the stock is today, a new buyer at today's price gets the current yield, not your yield on cost, since they're paying today's price, not your original one.

Two worked examples

A quick comparison using the exact formula above:

1. Current yield: a stock trading today at $75/share with a $2.25 annual dividend per share has a 3.0% current yield, and pays a monthly-equivalent of $0.1875 per share.
2. Yield on cost: the same stock, but you bought it three years ago at $50/share when the dividend was lower, has grown to today's $2.25/share dividend since then. Your yield on cost is 4.5% ($2.25 / $50), a full 1.5 percentage points higher than what a new buyer gets today at the current 3.0% yield, purely because your original cost was lower and the dividend has grown since.

Comparing yields across different types of investment

A "good" dividend yield depends heavily on what you're comparing it to, there's no single universal benchmark. Broad US stock market index funds have historically yielded somewhere in the 1.5% to 2% range for extended periods, reflecting a market weighted toward growth-oriented companies that reinvest profits rather than pay them out. Utility stocks, REITs and some financial companies commonly yield noticeably higher, often 4% to 7%, reflecting different business models and payout policies, not necessarily better or worse investments, just different ones. Comparing a REIT's yield directly against a technology index fund's yield without accounting for that structural difference is comparing two different kinds of assets, not a fair apples-to-apples check.

• Broad market index funds: often roughly 1.5% to 2%, reflecting a market skewed toward reinvestment-focused growth companies.
• Established, mature large-cap companies: often in the 2% to 4% range, balancing some payout with continued reinvestment.
• Utilities, REITs, and higher-yield sector funds: commonly 4% to 7%+, reflecting payout-focused business models required or chosen by those sectors.
• Anything well above that range deserves the payout-ratio and business-health check described below, rather than being taken at face value.

The dividend yield trap

Because yield rises automatically whenever a share price falls, an unusually high yield is frequently a symptom of a falling stock price and a business under pressure, rather than a genuinely generous payout. This pattern is common enough to have a name, the "dividend yield trap": a stock's price drops sharply on bad news, its yield spikes as a mechanical result, income-focused investors are drawn in by the now-high headline yield, and the company subsequently cuts or eliminates the dividend entirely once the underlying business problems catch up with it, leaving those investors with both a lower share price and a smaller (or zero) income stream. Before treating a high yield calculated here as attractive on its own, it's worth checking the company's payout ratio (what percentage of earnings or free cash flow the dividend consumes) and recent dividend history (has it been cut before, is it growing or flat), this calculator only tells you the math of today's yield, not whether that yield is likely to still exist next year.