Calculate the dividend yield of any stock instantly. Simply enter the stock price and annual dividend to see what percentage return you’re earning from dividends alone.
Calculate Dividend Yield
Find out what percentage return you earn from dividends
Reverse Calculator
Find the dividend needed to achieve a target yield
Quick Examples
What Is Dividend Yield?
Dividend yield is a financial ratio that shows how much cash income you receive from dividends relative to the stock’s current price. It’s expressed as a percentage and represents one of two main ways investors earn returns from stocks (the other being capital appreciation).
Think of dividend yield like a rental property’s cash-on-cash return. If you buy a $500,000 property that generates $20,000 in annual rent, that’s a 4% yield. Dividend yield works the same way—it tells you what percentage of your investment you’re getting back each year in the form of dividend payments.
According to Investing.com’s analysis, understanding dividend yield is essential for income-focused investors who depend on regular cash flow from their portfolios.
How to Calculate Dividend Yield
The dividend yield formula is straightforward:
Dividend Yield = (Annual Dividend Per Share ÷ Current Stock Price) × 100
Step-by-Step Calculation
Step 1: Find the annual dividend per share. If a company pays quarterly dividends of $0.75, multiply by 4 to get $3.00 annual dividend. Most companies pay quarterly, but some pay monthly, semi-annually, or annually.
Step 2: Find the current stock price. You can look this up on any financial website like Yahoo Finance, Google Finance, or your brokerage platform.
Step 3: Divide the annual dividend by the stock price, then multiply by 100 to convert to a percentage.
Example Calculation
Let’s calculate dividend yield for a stock trading at $150 per share that pays $6.00 in annual dividends:
- Annual Dividend: $6.00
- Stock Price: $150.00
- Dividend Yield = ($6.00 ÷ $150.00) × 100 = 4.00%
This means for every $100 you invest in this stock, you receive $4.00 per year in dividend income.
What Is a Good Dividend Yield?
A “good” dividend yield depends on your investment goals, the company’s sector, and current market conditions. Here’s a general framework:
Low Yield (0% – 2%)
Many growth-oriented technology companies and younger businesses fall into this range. Companies like Apple and Microsoft historically paid low yields because they reinvest most profits into growth rather than dividends. These stocks appeal to investors seeking capital appreciation more than current income.
Moderate Yield (2% – 4%)
This is the “sweet spot” for many dividend investors. Companies in this range often balance dividend payments with business reinvestment. Many Dividend Aristocrats—companies that have raised dividends for 25+ consecutive years—fall into this category. These stocks provide meaningful income while maintaining growth potential.
High Yield (4% – 6%)
Higher yields often come from mature companies in stable industries like utilities, REITs, or telecommunications. While attractive for income, these companies typically offer less growth potential. The higher yield compensates for slower price appreciation.
Very High Yield (6%+)
Yields above 6% require careful scrutiny. While some are legitimate (certain REITs, business development companies, master limited partnerships), unusually high yields can signal problems:
- Dividend in danger: The stock price may have fallen due to financial troubles, artificially inflating the yield
- Unsustainable payout: The company may be paying out more than it earns, making the dividend vulnerable to cuts
- Special situation: One-time special dividends can create temporary high yields that won’t continue
As noted by Omnicalculator’s dividend research, always check the payout ratio (dividends ÷ earnings) before investing in high-yield stocks. A payout ratio above 80-90% suggests the dividend may not be sustainable long-term.
Why Dividend Yield Changes
Dividend yield is dynamic—it changes as stock prices fluctuate, even when the actual dividend payment remains constant.
Price Fluctuations
If a stock pays a fixed $4.00 annual dividend:
- At $100/share: Yield = 4.00%
- At $80/share: Yield = 5.00% (higher yield from price drop)
- At $120/share: Yield = 3.33% (lower yield from price increase)
The dividend stayed the same, but the yield changed due to price movements. This is why you sometimes see dividend stocks with attractive yields after market sell-offs—the yield has mechanically increased because prices fell.
Dividend Changes
Companies regularly adjust their dividend payments:
- Dividend increases: Growing companies raise dividends annually, increasing your yield on the original purchase price
- Dividend cuts: Financial difficulties may force dividend reductions, decreasing yield
- Special dividends: One-time payments that temporarily boost yield but don’t represent sustainable income
Dividend Yield vs. Total Return
Dividend yield only measures income return—it doesn’t capture the complete investment picture.
Understanding Total Return
Total return = Dividend yield + Price appreciation (or – price depreciation)
Consider two scenarios:
Stock A:
- 5% dividend yield
- 0% price change
- Total return: 5%
Stock B:
- 2% dividend yield
- 10% price appreciation
- Total return: 12%
Stock B provided higher total returns despite a lower dividend yield. This illustrates why focusing solely on yield can be misleading—you need to consider the complete return picture.
That said, for retirees living on portfolio income or investors using a DRIP strategy, dividend yield matters significantly because it represents reliable cash flow that doesn’t require selling shares.
Using Dividend Yield in Investment Decisions
Compare Within Industries
Different industries have different typical yield ranges. Utilities average 3-4% yields, REITs often exceed 4%, while technology companies typically yield under 2%. Compare companies within the same sector for meaningful insights.
Track Yield on Cost
Your personal yield on cost differs from current yield. If you bought a stock at $50 that now trades at $100, and the dividend has grown from $2.00 to $4.00:
- Current yield (for new buyers): 4.00% ($4.00 ÷ $100)
- Your yield on cost: 8.00% ($4.00 ÷ $50 original cost)
Long-term dividend growth investors can achieve impressive yields on cost after holding quality dividend growers for decades.
Watch for Dividend Sustainability
Before investing based on yield, verify the dividend is sustainable:
- Payout ratio: Dividends should be less than 80% of earnings for most companies
- Free cash flow: Ensure the company generates enough cash to cover dividends
- Dividend history: Look for consistent or growing dividends over 5-10+ years
- Debt levels: High debt can threaten dividend payments during downturns
Common Dividend Yield Mistakes
Chasing the Highest Yields
New dividend investors often seek the highest yields available, but this strategy backfires when those dividends get cut. A 7% yield that gets reduced by half gives you a 3.5% yield plus a likely capital loss from the stock price declining. A sustainable 3.5% yield would have been better from the start.
Ignoring Dividend Growth
A 2% yield that grows 7% annually will surpass a static 4% yield in about 10 years on a yield-on-cost basis. Dividend growth matters just as much as current yield for long-term investors.
Not Accounting for Taxes
Dividends create taxable income (unless held in retirement accounts). Qualified dividends receive preferential tax treatment, but you’ll still owe 0%, 15%, or 20% federal tax depending on income, plus potential state taxes. Factor taxes into your yield calculations to understand after-tax returns.
Real-World Examples
Example 1: Johnson & Johnson (JNJ)
- Stock Price: $160
- Annual Dividend: $4.96 (quarterly payments of $1.24)
- Dividend Yield: $4.96 ÷ $160 = 3.10%
- Profile: Healthcare giant, Dividend Aristocrat, moderate yield with steady growth
Example 2: AT&T (T)
- Stock Price: $22
- Annual Dividend: $1.11
- Dividend Yield: $1.11 ÷ $22 = 5.05%
- Profile: Telecommunications company, higher yield due to mature business and capital intensity
Example 3: Apple Inc. (AAPL)
- Stock Price: $180
- Annual Dividend: $1.00 (quarterly payments of $0.25)
- Dividend Yield: $1.00 ÷ $180 = 0.56%
- Profile: Technology growth company, low yield but strong price appreciation potential
These examples illustrate how yield varies across different company types and investment profiles. Use our calculator above to explore yields for stocks you’re researching.
Next Steps
Ready to project your dividend income over time? Use our Advanced Dividend Growth Calculator to model how dividend reinvestment and regular contributions can grow your portfolio over 10, 20, or 30 years.
Want to understand when you need to buy stock to receive dividends? Read our guide on ex-dividend dates explained.
This calculator and educational content are for informational purposes only and do not constitute investment advice. Dividend yields change with stock prices, and past dividend payments do not guarantee future payments. Companies can reduce or eliminate dividends at any time. Consult with a qualified financial advisor before making investment decisions.
Frequently Asked Questions
A good dividend yield depends on your goals and the company’s industry, but generally 2-4% is considered attractive for most investors. Yields below 2% are common for growth-oriented companies that reinvest profits rather than pay dividends. Yields of 2-4% represent a balance between income and growth, often found in established companies like Dividend Aristocrats. Yields of 4-6% come from mature companies in stable industries like utilities or REITs. Yields above 6% require careful investigation—they can signal financial distress or an unsustainable payout. Always check the payout ratio (dividends ÷ earnings) to ensure the dividend is sustainable before investing based on yield alone.
Dividend yield is calculated using this formula: (Annual Dividend Per Share ÷ Current Stock Price) × 100. First, find the total annual dividend paid per share. If a company pays quarterly dividends of $0.50, multiply by 4 to get $2.00 annual dividend. Next, find the current stock price (available on any financial website). Finally, divide the annual dividend by the stock price and multiply by 100 to convert to a percentage. For example, a stock at $50 paying $2.50 annually has a dividend yield of ($2.50 ÷ $50) × 100 = 5.00%. Our calculator above performs this calculation instantly.
Dividend yield changes whenever the stock price changes, even if the actual dividend payment remains constant. This happens because yield is a ratio of dividend to price. If a stock pays a fixed $4 annual dividend: at $100/share the yield is 4%, at $80/share it’s 5%, and at $120/share it’s 3.33%. The dividend stayed the same, but the yield changed due to price movements. This is why dividend stocks often show higher yields after market sell-offs—the yield mechanically increases when prices fall. It also explains why growth stocks with rising prices show declining yields even when dividends increase modestly.
No, higher dividend yields aren’t always better and can sometimes signal problems. While attractive for income, unusually high yields (above 6-7%) often indicate the stock price has fallen due to financial troubles, creating what’s called a “dividend trap.” The high yield may not be sustainable if the company is paying out more than it earns or faces business challenges. Additionally, very high yields often come from companies with limited growth prospects—you’re trading growth potential for current income. A moderate, sustainable yield of 3-4% from a financially healthy company growing its dividend annually often produces better long-term results than chasing the highest yields available.
Dividend yield only measures the income portion of your investment return—it doesn’t include price appreciation or depreciation. Total return combines both dividend income and stock price changes. For example, a stock with a 3% dividend yield that appreciates 8% in price delivers an 11% total return. Conversely, a stock with a 5% yield that declines 10% in price produces a -5% total return. While dividend yield matters for income-focused investors who need cash flow, long-term wealth building depends on total return. Growth stocks with low yields can outperform high-yield stocks when you account for price appreciation, which is why balanced investors consider both metrics rather than focusing exclusively on yield.
