How to Calculate a Dividend Yield

Dividend yield is the relative percentage of cash a company distributes to its shareholders compared to its stock price.

Difficulty: Easy

Instructions

Things You'll Need:

• Stock price
• Stock purchase price
• Dividend amount

1. Assuming the amount of dividend paid is consistent throughout the year, multiply it by the number of dividends paid per year. Typically, publicly traded companies pay dividends four times per year (quarterly). If the dividend is not consistent, find the sum of dividends paid within one year.

2. To calculate the current dividend yield, divide the annual dividend from Step 1 by the current stock price and multiply by 100. The product will be the current dividend yield expressed as a percentage.

3. To calculate the dividend yield relative to the purchase price, divide the annual dividend from Step 1 by the average cost per share and multiply by 100. The result will be the dividend yield relative to the average cost per share expressed as a percentage.

Tips & Warnings

• If you are looking to purchase a stock, use the current dividend yield method from Step 2 to determine your potential return on investment via dividends.
• If you currently own a stock, use the relative dividend yield method from Step 3 to determine the dividend’s annual return on your investment.