Dividend Yield Calculator
Dividend yield, yield on cost, payout ratio, dividend cover and free-cash-flow payout — the four numbers that say whether a yield is safe or a warning.
Dividend Yield Calculator: with the default inputs, dividend yield is 4%.
The amount of one payment, not the annual total — the frequency below annualizes it.
What you actually paid. Yield on cost is measured against this, not against today's price.
Trailing twelve months. Negative for a loss-making company, which makes the payout ratio meaningless rather than merely bad.
- In words
- $0.60 a quarter is $2.40 a year — a 4% yield at $60.00, 6% on your cost, covered 1.67× by earnings.
- Annual dividend per share
- $2.4000
- Yield on cost
- 6%Annual dividend ÷ what you paid. Rises over time if the dividend grows; says nothing about today's value.
- Payout ratio
- 60%Dividend ÷ earnings per share. Above 100% the company is paying out more than it earns.
- Dividend cover
- 1.67Earnings ÷ dividend — the payout ratio upside down. Above 2 is comfortable.
- Free-cash-flow payout ratio
- 80%The one that matters: dividends are paid in cash, not in accounting profit.
- Your annual dividend income
- $1,200.00
- Income per payment
- $300.00
- Average monthly income
- $100.00
- Position value
- $30,000
- Earnings retained per share
- $1.6000What's left after the dividend to fund growth and pay down debt.
- Dividend safety read
- Tight but workable — little room for an earnings dip, and growth is likely to be funded elsewhere.
Assumptions
- The dividend per payment is annualized by the stated frequency; special dividends are excluded.
- Trailing figures — the yield is based on the dividend currently being paid, not a forecast.
- Payout and cover use trailing twelve-month earnings per share as entered; free-cash-flow payout uses operating cash flow less capex per share.
- No taxes, and no distinction between qualified and ordinary dividends.
- The yield-on-cost projection assumes a constant growth rate and no reinvestment.
| Price change | Share price | Yield |
|---|---|---|
| -40% | $36.00 | 6.67% |
| -20% | $48.00 | 5% |
| -10% | $54.00 | 4.44% |
| 0% | $60.00 | 4% |
| 10% | $66.00 | 3.64% |
| 25% | $75.00 | 3.2% |
| 50% | $90.00 | 2.67% |
The dividend is held constant. This is why a stock that has halved shows twice the yield — and why screening on yield alone finds companies in trouble.
| Year | Annual dividend per share | Yield on your cost | Your annual income |
|---|---|---|---|
| 0 | $2.4000 | 6% | $1,200 |
| 1 | $2.5440 | 6.36% | $1,272 |
| 2 | $2.6966 | 6.74% | $1,348 |
| 3 | $2.8584 | 7.15% | $1,429 |
| 5 | $3.2117 | 8.03% | $1,606 |
| 7 | $3.6087 | 9.02% | $1,804 |
| 10 | $4.2980 | 10.75% | $2,149 |
| 15 | $5.7517 | 14.38% | $2,876 |
| 20 | $7.6971 | 19.24% | $3,849 |
Yield on cost rises mechanically as the dividend grows. It's a satisfying number and a poor decision tool — the question is always what the shares yield today against the alternatives.
How this is worked out
The formula
Annual dividend = dividend per payment × payments a year Dividend yield = annual dividend ÷ current share price Yield on cost = annual dividend ÷ your cost per share Payout ratio = annual dividend ÷ earnings per share Dividend cover = earnings per share ÷ annual dividend (payout ratio inverted) FCF payout ratio = annual dividend ÷ free cash flow per share Annual income = annual dividend × shares owned
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Dividend per share
- The amount of one payment, not the annual total — the frequency below annualizes it.in dollars · 0 or more · defaults to 0.6
- Paid
- Choose one of 4 options.Quarterly (4× a year) · Monthly (12×) · Twice a year (2×) · Once a year (1×)
- Current share price
- A number.in dollars · 0 or more · defaults to 60
- Your cost per share
- What you actually paid. Yield on cost is measured against this, not against today's price.in dollars · 0 or more · defaults to 40
- Earnings per share (annual)
- Trailing twelve months. Negative for a loss-making company, which makes the payout ratio meaningless rather than merely bad.in dollars · defaults to 4
- Free cash flow per share (annual)(under More options)
- Operating cash flow less capex, divided by shares. Dividends are paid out of cash, not out of earnings.in dollars · defaults to 3
- Shares you own
- A number.0 or more · defaults to 500
- Expected dividend growth(under More options)
- Used only for the yield-on-cost projection table.a percentage · from -50 to 50 · defaults to 6
What you get back
- Dividend yieldmain answer
- In words
- Annual dividend per share
- Yield on cost
- Annual dividend ÷ what you paid. Rises over time if the dividend grows; says nothing about today's value.
- Payout ratio
- Dividend ÷ earnings per share. Above 100% the company is paying out more than it earns.
- Dividend cover
- Earnings ÷ dividend — the payout ratio upside down. Above 2 is comfortable.
- Free-cash-flow payout ratio
- The one that matters: dividends are paid in cash, not in accounting profit.
- Your annual dividend income
- Income per payment
- Average monthly income
- Position value
- Earnings retained per share
- What's left after the dividend to fund growth and pay down debt.
- Dividend safety read
What this assumes
- The dividend per payment is annualized by the stated frequency; special dividends are excluded.
- Trailing figures — the yield is based on the dividend currently being paid, not a forecast.
- Payout and cover use trailing twelve-month earnings per share as entered; free-cash-flow payout uses operating cash flow less capex per share.
- No taxes, and no distinction between qualified and ordinary dividends.
- The yield-on-cost projection assumes a constant growth rate and no reinvestment.
About this calculator
Dividend yield is annual dividend divided by share price — the cash return the market is currently offering on the money you'd put in today. A $0.60 quarterly dividend is $2.40 a year; at a $60 share price that's a 4.00% yield. Simple arithmetic, and almost every mistake in income investing comes from stopping there.
This calculator is about a stock as it stands today. If you want to project income over years, with reinvestment and growth compounding, use the dividend calculator instead.
The yield trap
Yield has price in the denominator, so it rises whenever the price falls. A stock that halves doubles its yield without the company doing anything at all — and what the market is usually saying is that the dividend won't survive. Screening for the highest yields reliably produces a list of companies about to cut, which is why the other three ratios here exist.
The three safety checks
- Payout ratio — dividend ÷ earnings. Below 60% is comfortable for most industries; above 100% means paying out more than you earn. Utilities and REITs run structurally higher (REITs are required to distribute at least 90% of taxable income), so compare within a sector.
- Dividend cover — the same fact inverted: earnings ÷ dividend. Analysts and UK company reports prefer it because "covered 1.6 times" is more intuitive than "62.5% payout". Above 2× is comfortable, below 1.5× is worth watching, below 1× is being funded from somewhere other than profit.
- Free-cash-flow payout is the honest test. Dividends are paid in cash, not in accounting profit. A company with strong earnings and heavy capital spending may have no cash left after the capex, and a company with an earnings dip from a write-down may be perfectly able to pay. When the FCF payout and the earnings payout disagree, believe the cash.
Yield on cost, and why not to trust it
Yield on cost is the annual dividend divided by what you paid. Buy at $40 with a $2.40 dividend and it's 6.00%, against a 4.00% yield for a new buyer — and it climbs every year the dividend rises. It is a genuinely pleasant number and a genuinely bad decision tool, because your cost basis is a historical accident that tells you nothing about whether to hold the shares now. The relevant comparison is always today's yield against today's alternatives. A holding on a 9% yield on cost and a 2% current yield is a holding you would probably not buy today.
Reading the rest
Earnings retained per share is what's left to reinvest, buy back stock or pay down debt after the dividend. A company distributing nearly all of it is choosing income over growth, which is a legitimate strategy for a mature business and a warning sign in one that still needs to invest.
Two things this doesn't model: taxes, which vary enormously between qualified dividends, ordinary income and tax-sheltered accounts and can take 15–37% of the cash; and the difference between a trailing yield and a forward one. If the dividend was cut last quarter, the trailing figure quoted on most sites is fiction.
Frequently asked questions
▸How do I calculate dividend yield?
Annual dividend per share divided by the current share price. Annualize the payment first: a $0.60 quarterly dividend is $2.40 a year, which at $60 a share is a 4.00% yield.
▸What is yield on cost?
The annual dividend divided by what you originally paid rather than today's price. It rises as the dividend grows, so long-term holders see high figures — but it's a record of a past purchase, not a reason to keep holding.
▸What is a good payout ratio?
Below about 60% of earnings for most companies. REITs are required to distribute at least 90% of taxable income and utilities often run 70–80%, so the ratio only means something within a sector. Above 100% the dividend is being funded from somewhere other than profit.
▸Is a high dividend yield a good thing?
Often the opposite. Yield rises when price falls, so the highest yields in a screen usually belong to companies the market expects to cut. Check the payout ratio, the free-cash-flow payout and whether the dividend has been raised or held for several years.
▸Should I use earnings or free cash flow to judge a dividend?
Free cash flow. Dividends are paid in cash; earnings include non-cash charges and exclude capital spending. When the two payout ratios disagree, the cash one is the reliable signal.
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