Dividend yield shows the income a stock pays relative to its price — annual dividend divided by share price. A quick gauge of income return, and the basis for “how much will I earn?”
The example
$2 annual dividend on a $50 share.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Dividend / yr | $2.00 |
| 3 | Price | $50 |
| 4 | Yield | 4.0% |
The formula
The formula:
How it works
How it works:
- Dividend yield = annual dividend per share ÷ share price.
- Format as a percentage. It rises when the price falls (same dividend, lower price) and vice versa.
- Annual income from a holding is
shares × dividendPerShare, orinvestment × yield. - Compare yields across stocks — but a very high yield can signal a falling price or an at-risk dividend.
High yield, hidden risk: an unusually high yield often means the market expects a dividend cut or the price has dropped on bad news. Pair yield with the payout ratio and dividend history before chasing it.
Try it: interactive demo
Dividend, price, shares.
Variations
Annual income
From a holding:
Yield on cost
Vs your buy price:
Payout ratio
Dividend vs earnings:
Pitfalls & errors
Trailing vs forward. Past dividends differ from expected ones — be clear which you’re using.
High yield ≠ good. It can reflect a price drop or an unsustainable payout.
Total return. Yield ignores price change — combine with capital gains for the full picture.
Practice workbook
Frequently asked questions
How do I calculate dividend yield in Excel?
How do I find my annual dividend income?
Is a higher dividend yield always better?
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