Dividend Yield Calculator — Yield and Yield on Cost

What dividend yield measures

Dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage. A share trading at 50 that pays 2 per year yields 4.00%. The measure answers a specific question: how much income does each unit of currency invested at today's price produce? Because the denominator is the live price, the yield changes every trading day even when the dividend does not. A share whose price falls from 50 to 40 with an unchanged 2 dividend now yields 5% — a higher figure produced by a weaker price, not a more generous payout. That distinction matters more than any other when reading a yield number.

From yield to actual income

Yield is a rate; income is an amount. A holding of 200 shares paying 2 per share generates 400 a year, which the calculator also breaks into quarterly and monthly equivalents of 100 and 33.33. Companies pay on different schedules — quarterly schedules are common in some markets, half-yearly and annual schedules in others — so the equivalents are a smoothing convenience for comparing against regular outgoings, not a claim about when cash actually arrives. The Dividend Reinvestment Calculator extends this arithmetic to the case where each payment buys more shares instead of being taken as cash.

Yield on cost: the long holder's number

Yield on cost divides the same annual dividend by the price originally paid instead of today's price. Shares bought at 40 that now pay 2 per year have a yield on cost of 5.00%, even while the market yield sits at 4.00%. The two figures serve different purposes. Market yield describes what a new buyer gets at today's price; yield on cost describes what an existing holding earns on the capital actually committed. For investors who hold dividend growers over many years, yield on cost tends to climb as payouts rise against a fixed cost basis — a 3.25 dividend against a 78.40 purchase price is a 4.15% yield on cost regardless of where the share trades now. It is a backward-looking measure, though: it says nothing about whether holding or switching is the better use of the capital today.

Trailing versus forward dividends

The dividend figure entered matters as much as the price. A trailing figure sums the payments actually made over the last twelve months; a forward figure annualises the most recently declared payment. The two diverge whenever a payout has just been raised or cut. Published yield figures mix both conventions, which explains why two websites can quote different yields for the same share on the same day. Entering each convention here and comparing the results shows the size of that gap for any specific share.

Why the highest yield is not automatically the best income

A very high yield relative to comparable companies often reflects a price that has fallen on doubts about the payout's durability. If the dividend is later cut, the realised yield lands well below the advertised one. Payout ratio — the share of profits paid out as dividends — is one commonly used context figure: a payout consuming most or all of earnings leaves less room to sustain the dividend through a weak year. Yield describes the present arrangement; it carries no information about whether that arrangement continues. The Dividend Growth Calculator models the other side of the coin, where a lower starting yield grows over time.

What the calculator does not include

The figures here are gross. Many jurisdictions withhold tax on dividends or tax them as income, and cross-border holdings can face withholding at source with partial recovery through tax treaties. Fees, currency movements on foreign holdings, and the difference between declared and reinvested amounts are also outside this calculation. The yield and income rows describe the cash the company distributes, not the cash that lands in an account after those effects.