Dividend Yield Formula
Calculate the annual return from dividends relative to stock price.
Compare income-generating investments at a glance.
The Formula
Dividend Yield = (Annual Dividends per Share / Price per Share) × 100
Dividend yield shows how much income you receive relative to the stock price. It is a key metric for income investors comparing different dividend-paying stocks.
Variables
| Symbol | Meaning |
|---|---|
| Dividend Yield | Annual dividend return as a percentage |
| Annual Dividends | Total dividends paid per share in one year |
| Price per Share | Current market price of one share |
Example 1
A stock pays $2.40 in annual dividends and trades at $60
Yield = (2.40 / 60) × 100
Yield = 4.0%
Example 2
A stock pays quarterly dividends of $0.50. Share price is $80.
Annual dividend = $0.50 × 4 = $2.00
Yield = (2.00 / 80) × 100
Yield = 2.5%
When to Use It
Use the dividend yield when:
- Comparing income potential of different stocks
- Building an income-focused investment portfolio
- Evaluating whether a dividend is sustainable relative to the stock price
- Comparing stock income to bond yields or savings rates