You can use the Dividend Yield Calculator below to find the yield on your investment. Then below the calculator, you’ll find the dividend yield formula along with an explanation.
To find the dividend yield, only three of the inputs below are required. You can enter the Price per Share, the Dividend per Share, and the Dividend Frequency. Then if you want more info on your total investment, you can enter the Number of Shares and the Dividend Tax Rate.
Your results will appear here.
Dividend Yield Formula
The dividend yield formula is simple. It’s the annual Dividend per Share divided by the Price per Share. Here’s the formula…
Dividend Yield = Annual Dividend ÷ Price per Share
It’s important to note that this calculator annualizes the dividend. For example, many companies pay quarterly dividends. So you can enter that amount and the default dividend frequency is quarterly. So it takes it times four…
Dividend Yield = (Quarterly Dividend × 4) ÷ Price per Share
This yield calculator also lets you put in monthly or annual dividends. So it would take the dividend times 12 or 1, respectively.
When you put in the number of shares, you can find your total investment’s value. And to calculate dividend yield after taxes, take the dividend yield times one minus the tax rate.
Dividend Yield After Tax = Dividend Yield × (1 – Dividend Tax Rate)
Dividend Yield Calculator Example
As an example, let’s look at my investment in Altria. I bought shares for $39.53 and the company pays a $0.84 quarterly dividend.
To find the dividend yield, I first need to annualize the quarterly dividend by taking it times four. That gives me $3.36 in dividend income. Then $3.36 divided by my purchase price of $39.53 equals an 8.5% dividend yield.
That calculates the dividend yield assuming Altria continues to pay $0.84 each quarter and the share price doesn’t change. Although, Altria has a history of raising its dividend each year. On top of that, the share price has climbed since I bought in.
The dividend yield I calculated is called the yield on cost. But as the share price moves, so does the current dividend yield. For example, if Altria keeps paying the same dividend and shares trade at $50, then the current dividend yield would drop to 6.72%. There’s an inverse relationship between share price and dividend yield.
The dividend yield calculator above is simple to use and the formula behind it is also straight forward. Yet, it’s a powerful tool.
Calculating the dividend yield can help you project your future dividend income. And generally, the higher the yield, the better. Just make sure the company paying the dividend is solid and can continue to reward shareholders.
I hope my calculator helps you along with my explanation. If you have any questions, please reach out. I’d also love to hear any feedback.
P.S. Here’s a list of 10 Value Dividend Stocks that all pay healthy dividends. These companies have a history of paying higher dividends each year.