Dividend Yield Calculator
Calculate dividend yield, annual and monthly income, yield on cost, and see how price changes affect your yield.
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What Is Dividend Yield?
Dividend yield is the annual dividend per share divided by the current stock price, expressed as a percentage. It tells you the cash return you earn from dividends relative to what you pay for the stock. A $2 annual dividend on a $50 stock gives a 4% yield.
Yield on Cost
Yield on cost (YOC) measures your dividend income relative to your original purchase price — not today's price. If you bought a stock at $40 and it now pays $2 per year, your YOC is 5% even if the current yield based on today's price is only 3%. Long-term dividend investors watch YOC grow over time as companies increase their dividends.
The Yield Trap
An unusually high yield is not always attractive. When a stock price drops sharply — due to business deterioration — the yield appears high simply because the denominator (price) fell. This is called a yield trap. The company may soon cut its dividend, erasing the apparent benefit. Always check the payout ratio (dividends / earnings) — anything above 80–90% may be unsustainable.
Qualified vs. Ordinary Dividends
Qualified dividends (from U.S. corporations held for at least 61 days) are taxed at lower long-term capital gains rates (0%, 15%, or 20%). Ordinary dividends are taxed as regular income. REITs and MLPs often pay ordinary dividends. Check the tax classification of any dividend-paying investment before assuming a tax-friendly return.
Ex-Dividend Date
To receive a dividend, you must own the stock before the ex-dividend date. If you buy on or after the ex-date, you will not receive the upcoming payment. The stock price typically drops by approximately the dividend amount on the ex-date, reflecting the cash leaving the company.